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Indian firms are ramping up issuance of dollar-denominated bonds this 12 months to take advantage of a rising world urge for food for high-yielding debt and the relief of home guidelines on the use of funds raised, information from Refinitiv confirmed on Wednesday.

Refinitiv information confirmed Indian firms have issued a record $5.6 billion worth of dollar bonds between January 1 and February 11. That follows a record gross issuance of $16.5 billion in 2019.

They raised $3.6 billion in January, and $2 billion to this point in February, the information confirmed.

The tightness in home funding markets and the attract of Indian bonds abroad markets ought to spur additional issuance this 12 months, analysts mentioned.

“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,” mentioned 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 historically heavy debtors of dollar bonds and they account for about 48 per cent of such bonds issued by corporations within the Asia-Pacific, Refinitiv information confirmed.

Last 12 months’s leisure of norms by the Reserve Bank of India on the end-use of funds raised by means of exterior industrial borrowings have given firms another excuse to boost cheaper offshore funds.

Under the brand new rule, corporations can now use proceeds from exterior industrial borrowings (ECBs) with a minimal common maturity interval of seven years for the reimbursement of rupee loans raised domestically for capital expenditure.

Adani Electricity, a subsidiary of Adani Transmission Ltd, raised $1 billion final week, which is to this point the third largest borrowing in {dollars} by an Indian agency, in line with Refinitiv information.

The firm mentioned the proceeds could be used to repay current rupee-denominated loans and for basic company functions.

The coupon on Adani’s 10-year bonds was 230 foundation factors over US Treasury yields.


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