Why Companies Issue Bonds

India's corporate sector is gearing up for a robust bond issuance spree, with key players like Tata Power Renewable Energy, Aditya Birla Capital, and Delhi International Airport unveiling plans to raise substantial funds through long-term bond offerings. Here's a detailed analysis of the recent developments: 1. **Tata Power Renewable Energy's 15-Year Bond Issue**: - Tata Power Renewable Energy is set to raise $171.4 million by issuing 15-year bonds with a coupon rate of 7.65%. - The company has invited commitment bids for the issue, indicating its intent to finalize the funding swiftly. 2. **Aditya Birla Capital's Zero Coupon Bond Issue**: - Aditya Birla Capital is planning to raise 5 billion rupees, including a greenshoe option, through zero coupon bonds maturing in three years, eight months, and 27 days. - The zero coupon structure suggests a longer-term commitment from investors, as these bonds do not pay any interest during the tenor. 3. **Delhi International Airport's 15-Year Bond Issue**: - Delhi International Airport is set to raise $114.28 million through 15-year bonds with a quarterly coupon payment structure at an initial rate of 8.75%. - The bonds will have a staggered redemption, maturing equally from the end of the sixth year to maturity, providing a structured approach to cash flow management. These bond issuance plans reflect the companies' strategic move to bolster their financial positions, likely to fund ongoing projects and operations. The varied coupon structures and tenures offer investors a range of risk-return profiles, aligning with different investment strategies and risk appetites.