Here's How Non-Bank Lenders Plan to Raise Money

Source: Economic Times

Social distancing is the prescribed norm to beat the viral chain, but in the complex world of financing, it pays to stick together. That’s what many small non-bank lenders plan to do: Come together and sell bonds that make the cut for bank financing.

As things stand now, the majority of the Nonbank Financial Companies (NBFCs) can’t sell bonds that make the grade to draw in the banks, which are using funds raised through the targeted long-term repo operation mechanism to finance corporate and other lenders. The pooled issues will help many NBFCs including microfinance firms, especially those below investment grade to access the TLTRO liquidity tap since their credit rating will likely head north, lowering borrowing costs.