India Inc raises $9 bn via overseas bonds in 2013

Raises more than double the amount raised last calendar year
Kolkata: India Inc is making a scramble to raise money abroad. Indian private and state-run companies, other than financial institutions, have raised $9.23 billion by selling foreign currency bonds in foreign markets in 2013. This is more than double the money they raised through this route during the last calendar year. In 2012, domestic companies had raised $4.12 billion through foreign currency bonds.

There were 16 foreign bond issuances by private and public sector companies from India in 2013 compared to nine a year earlier. Standard Chartered Bank topped the league table helping corporates raise $1.3 billion this calendar year. It was followed by Deutsche Bank, JPMorgan, Royal Bank of Scotland (RBS) and Citi.

"The overseas issuances were largely driven by volume rather than pricing. Indian companies were able to raise large sums of money through foreign currency bonds. It would have been difficult for them to raise this money in India in the current environment," said a senior banker with a large foreign bank in India.

He added investors' confidence in Indian issuers had improved in recent months, which helped domestic companies in raising money abroad. Apart from the dollar, local companies have also raised funds in other foreign currencies like the Euro, Swiss franc and Singapore dollar.

"Many issuers were of the view that interest rates could go up in the future and, hence, we saw a lot of opportunistic fund-raising as well. Overseas bond markets presented a perfect opportunity to raise large amounts and longer tenor liabilities, compared to the bank loan market," Randhir Singh, head of financing at Deutsche Bank in India, said.

Deutsche Bank managed nine of the 16 deals this year and helped its clients raise $1.29 billion from foreign bond markets.

In most cases, companies decided to use the money abroad — either to expand their business or refinance some of their existing foreign currency liabilities.

Bankers remained confident that this trend of raising money through foreign currency bonds will continue in 2014, at least in the first couple of quarters. The deal pipeline for the first quarter of the 2014 calendar year is estimated to be around $2 billion. "The new year should start on a good note, as the first quarter deal pipeline is quite robust," said a senior banker with a mid-sized foreign bank in India.