State oil companies take the CP route to raise Rs 12,500 crore

Mumbai | New Delhi: Four stateowned oil companies — Indian Oil CorpNSE -3.86 %, Bharat PetroleumNSE -4.45 % Corp, Hindustan Petroleum and ONGC — together garnered about Rs 12,500 crore in the biggest single-day fund-raising since the lockdown began.

Companies sought to raise the short-term funds to meet working capital needs. Fund houses and banks, looking for safe bets, bought these commercial papers (CPs) maturing in a maximum of three months.

“The government-backed oil refiners sought to raise money cheaply, taking advantage of the broader risk aversion,” said Dhawal Dalal, CIO – fixed income at Edelweiss Asset. “Any investor, be it a fund house or a bank, is comfortable investing in these companies that are deemed quasi-sovereign. In periods of economic stress, investors always seek safety rather than higher rates.”