Indian firms are ramping up issuance of dollar-denominated bonds this year to exploit a rising global appetite for high-yielding debt and the relaxation of domestic rules on the use of funds raised, data from Refinitiv, a global provider of financial markets data and infrastructure, showed on Wednesday.
As per the data, they raised $3.6 billion in January, and $2 billion so far in February. The tightness in domestic funding markets and allure of Indian bonds overseas markets must spur further issuance, analysts said.
“Indian borrowers are benefiting from investors seeking yield in the current low interest rate environment globally. The ability to raise long-dated bonds, in addition, makes the offshore markets attractive for some Indian companies,” said Muralidharan Ramakrishnan, senior director at Fitch Ratings.
“Indian companies also benefit from investors looking to diversify their portfolios beyond the Chinese issuers.”
Chinese firms are traditionally heavy borrowers of dollar bonds and they account for about 48 per cent of such bonds issued by companies in the Asia-Pacific, Refinitiv data showed.
Last year’s relaxation of norms by the RBI on the end-use of funds raised through external commercial borrowings have given firms another reason to raise cheaper offshore funds. Under the new rule, companies can now use proceeds from external commercial borrowings (ECBs) with a minimum average maturity period of seven years for the repayment of rupee loans raised domestically for capital expenditure.
Adani Electricity, a subsidiary of Adani Transmission Ltd, raised $1 billion last week, which is the third biggest borrowing in dollars by an Indian firm, according to Refinitiv data.
The firm said the proceeds would be used to repay existing rupee-denominated loans and for general corporate purposes.