Mumbai Indian companies are set to raise a record amount of capital, beating their pre-pandemic highs in the offshore debt market, as foreign investors, who are looking to rebalance their portfolios, pursue their bonds.
With bond yields at all-time lows, fundraising activity in the offshore bond market is on track to surpass the record $21 billion set in 2019. This year, Indian companies have raised up to $19 billion, data from DeLogic showed.
Companies such as Tata Motors Ltd., HDFC Bank Ltd. and Axis Bank Ltd. have raised global bonds this year at the cheapest rates for their respective credit ratings as compared to companies with similar ratings in the Asia Pacific region or even globally.
“Right now, it has a sweet spot in the global debt capital market (DCM). The kind of reception that investors are giving to Indian issuances is why some of the recent transactions have achieved record-breaking competitive prices. TML Holdings Pte Ltd (a wholly-owned unit of Tata Motors) issued a $450 million Reg S only bond in June 2021, and the pricing for it was the tightest return ever made by any issuer in that rating category. achieved in the Asia-Pacific. History of bond markets,” said Bhavik Pandya, Head, South and South-East Asia DCM, Bank of America.
“A similar theme emerged in the case of HDFC Bank with their $1 billion AT1 bond issuance, where they attracted a 3.7% coupon, the highest so far for a bank AT1 instrument in that rating category globally. had the strictest price. Similarly, for issuing Axis Bank AT1 bonds, they got the highest returns globally for their rating category,” Pandya said.
These transactions show that investors are willing to buy India’s exposure at prices they would not offer in any other market. “There has been a major positive change in investor appetite towards India, with investors looking at options as they restructure portfolios. They are looking for a safe haven in quality credit from India.”
Investors’ appetite for bonds of Indian companies has also attracted many first-time issuers to the market, including cash-rich technology companies.
“We have seen a spurt in issuance of debut/inauguration offshore bonds from India. Wipro Limited and HCL Technologies Limited were the debut bonds made in 2021, which fetched exceptional value. This is again a testament to the fact that global investors are very comfortable buying quality issues from India,” Pandya said.
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