In 2019, Indian companies raised fivefold funds through dollar bonds

Mumbai, Ta. 27 December 2019, Friday

Due to the difficulty of obtaining domestic funds and relatively cheap borrower spending in offshore markets, Indian corporates have raised $ 8 billion through dollar bonds. That's five times more than last year.

According to the data obtained, infrastructure, power, non-banking financial companies (NBFCs) and metal companies appear to have raised huge sums through dollar bonds to meet their financial needs.

Globally, interest rates are relatively low. Borrowers usually consider interest rates first. Forward premiums are good because of the stability in currencies, which reduces the hedging cost, said a company MD.

The home-based NBFC also uses the External Commercial Borrowings route to raise money from abroad. In the first six months of the year, $ 5 billion was raised by the Indian companies through the ECB, which raised $ 1.8 billion in the full year of the year.

In view of strong demand signals from Indian companies, the maximum rate for this device for low rating companies has been reduced from 8% last year to 8.5%. At home, raising money at a practical rate is difficult for the NBFC. Fund houses and banks have begun to refrain from providing funds to NBFCs.

After the IL&FS chapter, banks have begun to refrain from financing NBFCs due to asset-liability mismatches. As a result, NBFCs are being forced to meet their financial needs through the ECB.

Analysts are expecting the fundraising rate to be higher through the ECB in the next four. Dollar bonds have been linked to the US Treasury Yields. Yields, which was down from 9.2 percent in November 1, have now fallen to 8.5 percent. As foreign investors are getting good returns on dollar bonds issued by Indian companies, they are keen to invest in these bonds.