Covered bonds help sub-AAA issuers raise cheaper funds – Economic Times

Synopsis

Risk aversion due to Covid driving issues; investors protected against default and get attractive yields, while borrowers pay 50-125 bps lower. About a dozen non-banking companies raised covered bonds, through two routes: non-convertible debentures and market-linked debentures. About three-fourths of them are rated in the single-A category and have sold the securities in the primary market with mutual funds, insurers and pension funds investing in them.

Mumbai: India’s bond market has had an unintended positive impact from Covid-19 — a surge in the issue of covered bonds, which offer better protection against defaults, by companies that do not enjoy the top rating. Investors in covered bonds have the right over a pool of assets held by the issuers, primarily non-bank lenders, in case of a default. The issue of these instruments has risen five-and-a-half times to Rs 2,200 crore last fiscal

BY

ET Bureau

  • GIFT ARTICLE
  • FONT SIZE

    AbcSmall

    AbcMedium

    AbcLarge

  • SAVE
  • PRINT
  • COMMENT

Sign in to read the full article

You’ve got this Prime Story as a Free Gift

₹399/month

Monthly PLAN

Billed Amount ₹399

No Trial Period

₹399

₹208/month

(Save 49%)

Yearly PLAN

Billed Amount ₹2,499

15 Days Trial +Includes DocuBay and TimesPrime Membership.

₹399

₹150/month

(Save 63%)

2-Year PLAN

Billed Amount ₹3,599

15 Days Trial +Includes DocuBay and TimesPrime Membership.

Already a Member? Sign In now

Special Offer on ET Prime

Subscribe to ET Prime – Get Flat 20% Off

View Plans

Special Offer on ET Prime

Subscribe to ET Prime – Get Flat 25% Off

View Plans

Special Offer on ET Prime

Subscribe to ET Prime – Get Flat 25% Off

View Plans

Why ?

  • 42031747

    Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors

  • 42031747

    Stock analysis. Market Research. Industry Trends on 4000+ Stocks

  • 42031747

    Clean experience with

    Minimal Ads

  • 42031747

    Comment & Engage with ET Prime community

  • 42031747

    Exclusive invites to Virtual Events with Industry Leaders

  • 42031747

    A trusted team of Journalists & Analysts who can best filter signal from noise