Yoga Guru’s Patanjali Plans First Bond Sale as Costs Suck Cash
Baba Ramdev’s Patanjali Ayurved looks to raise up to Rs 250 crore through its first local-currency bond issuance.
(Bloomberg) -- Yoga guru Baba Ramdev’s Patanjali Ayurved Ltd. is planning its first rupee bond issuance, seeking to benefit from the lowest borrowing costs since 2004.
The manufacturer of ayurveda-based skincare and food products will seek bids Thursday for as much as 2.5 billion rupees of notes maturing in three years, according to a person familiar with the matter. The debt, rated AA- by Brickwork, carries a semi-annualized coupon of 10.1%, the person said, asking not to be identified as the details aren’t public.
The interest payable is higher than the 6.85% on AA rated debt with similar maturity. Patanjali’s liquidity has been constrained due to increased investments, capital expenditure and also lower profitability, Brickwork said in a March 14 report, adding that average working capital limit utilization remains high at 97.60% for the 15-month period ended January.
Patanjali joins other Indian issuers in selling a record amount of rupee bonds this fiscal year to build cash buffers to cushion the impact of the coronavirus pandemic. Policy makers have slashed interest rates in recent weeks amid forecasts of a rare contraction for Asia’s third-largest economy.
“Patanjali is tapping the market for the first time as the company may intend to diversify its funding sources and take advantage of the fall in overall borrowing costs,” said Ajay Manglunia, managing director and head at JM Financial Products Ltd.
Yields on AA rated three-year corporate bonds fell on Tuesday to the lowest level since 2004, according to data compiled by Bloomberg.
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