New Mr Bond on Debt Street: LIC steps up buys of top-rated NBFC & corporate papers
Life Insurance Corp (LIC) is stepping up activity in a space where banks are wary of a hawkeyed regulator and higher capital needs, with the country's biggest institutional investor in tradable securities recently buying debt issued by highly rated non-banking financial companies and corporates, including Reliance Industries.
LIC subscribed to a lion's share of Reliance's ₹20,000-crore bond sale last month, while also taking up a major portion of a bond sale earlier this week by Tata Capital Financial Services (TCFSL), a subsidiary of Tata Capital, sources aware of the developments told ET. LIC had bought ₹13,000 crore of RIL's bonds, the sources said.
The insurance sector giant is also said to have deployed funds in a September bond sale by another highly-rated NBFC — L&T Finance, the sources said.
An email sent to LIC did not receive a response by the time of publication.
RIL, Tata Capital Financial Services and L&T Finance also did not respond to emails sent by ET seeking comments on the matter.
On November 9, RIL sold 10-year AAA-rated non-convertible debentures worth ₹20,000 crore, marking the largest-ever bond sale by an Indian firm that is not in the financial sector. The coupon rate, or the interest paid out to investors, for RIL's bonds was set at 7.79%.
One of the reasons why LIC is increasing its investments in corporate bonds is to offer guaranteed return products to policyholders.
LIC has introduced Jeevan Utsav — a guaranteed non-par product offering 10% sum assured regular income.
«We have shifted our focus to non-par products,» LIC chairman Siddhartha Mohanty had told ET in a recent interview. «We have our strategy as to how we can earn beyond G-sec in NCDs depending on the quality of the paper.»
