Domestic companies are lining up to seek dollar-denominated debt as global interest rates soften, but only a few are likely to find it as foreign investors remain wary about the credit quality of many, bankers say.
Mumbai:
From the start of 2019 through Thursday, when India’s giant election got under way, more than a dozen companies raised $7 bn offshore, according to Refinitiv. That’s well above the $4.7 bn done in 2018, when dollar liquidity was tight due to four rate hikes by the US Federal Reserve. And among those aiming for dollar-debt are renewable energy firms Adani Green Energy Ltd, Greenko Group and Azure Power, according to people knowledgeable about their plans.
Also wanting to tap offshore funds are non-bank finance companies (NBFCs) Bajaj Finance, Tata Capital, Tata Motor Finance, L&T Finance and Shriram Transport Finance, according to bankers who estimate that in total they hope to secure $2.0 bn-$2.5 bn. Along with manufacturing firms, NBFCs are natural applicants for securing offshore funding. The institutions - commonly called shadow banks in India - are the biggest source of funding for small businesses. Many NBFCs need to increase capital, and are struggling to do it domestically.
Also wanting to tap offshore funds are non-bank finance companies (NBFCs) Bajaj Finance, Tata Capital, Tata Motor Finance, L&T Finance and Shriram Transport Finance, according to bankers who estimate that in total they hope to secure $2.0 bn-$2.5 bn.
It’s no surprise that firms want to tap the offshore market, given lower rates, ample dollar liquidity, reduced rupee hedging costs and the reluctance of Indian lenders - many of whom are grappling with bad debts - to take on more risk. Also making offshore debt attractive is that the Reserve Bank of India has eased external commercial borrowings guidelines, and started forward dollar-rupee swap auctions.
From the start of 2019 through Thursday, when India’s giant election got under way, more than a dozen companies raised $7 bn offshore, according to Refinitiv. That’s well above the $4.7 bn done in 2018, when dollar liquidity was tight due to four rate hikes by the US Federal Reserve. And among those aiming for dollar-debt are renewable energy firms Adani Green Energy Ltd, Greenko Group and Azure Power, according to people knowledgeable about their plans.
Also wanting to tap offshore funds are non-bank finance companies (NBFCs) Bajaj Finance, Tata Capital, Tata Motor Finance, L&T Finance and Shriram Transport Finance, according to bankers who estimate that in total they hope to secure $2.0 bn-$2.5 bn. Along with manufacturing firms, NBFCs are natural applicants for securing offshore funding. The institutions - commonly called shadow banks in India - are the biggest source of funding for small businesses. Many NBFCs need to increase capital, and are struggling to do it domestically.
Also wanting to tap offshore funds are non-bank finance companies (NBFCs) Bajaj Finance, Tata Capital, Tata Motor Finance, L&T Finance and Shriram Transport Finance, according to bankers who estimate that in total they hope to secure $2.0 bn-$2.5 bn.