India Inc may raise $30 bn via bonds | Economic Times

Mumbai: Indian companies may end up raising as much as $30 billion in overseas bond sales in 2021, after a dream start to the year where in the very first week they raised $2.1 billion.The funds raised in the first seven days of this month were 15% of the proceeds from offshore issues in the whole of last year, and the highest on record for the opening week of a calendar year.Investment bankers expect non-bank finance companies that are seeking to raise money amid signs of economic revival to lead the fundraising rush.“By the looks of it, given the liquidity levels and the low yield environment, this year's bond sales could well be significantly higher than 2020," said Chetan Joshi, HSBC India’s head of debt financing.About two dozen Indian companies collectively raised $14.01 billion abroad in 2020, down from $26.5 billion the previous year, show data from Dealogic, a global analytics firm."After the massive selloff in the first half of 2020, global investors are now highly liquid and seem to have identified Indian issuers as having emerged fairly resilient from the credit effects of the pandemic," Joshi said.Fundraising this year could only accelerate, as companies plan to meet resurgent demand as economic activity returns to normal levels with the country set to start vaccination against Covid-19, market players said.State-run Power Finance Corporation is set to launch an issue next week, while its subsidiary REC is considering a separate offshore bond sale.“Optimism on corporate earnings this year is also fuelling a great deal of interest in India paper globally,” said Sunil Khaitan, India head, Global Capital Markets, at Bank of America. “Investors are reposing faith a lot more on Indian corporates as compared to other emerging markets peers, as they look for quality names which potentially can rise faster in the aftermath of Covid-19.”A few local non-banking finance companies along with a gas company attached to an Ahmedabad-based conglomerate are discussing offshore bond sales with investment bankers, people in the know said.Sovereign-backed State Bank of India, Exim Bank and privately held Shriram Transport Finance sold bonds at historic low rates in the past week. SBI raised $600 million with five-and-a-half-year maturity offering a 1.8% coupon.Shriram Transport Finance mopped up $500 million offering 4.4% with a three-and-a-half-year maturity.Strong investor demand triggered a success story for the Exim Bank issue, which was priced at 2.25% for 10-year money. It obtained a record low rate by any issuer for a 10-year paper.Despite the extremely low local rates, regulatory pricing caps on external commercial borrowings and potential volatility due to Covid-19, bond sales could exceed the volumes seen in 2019, bankers said.