Sharp rise in demand for dollar bonds

Energy, infra firms getting good response for track record in debt repayment

Indian firms are witnessing a sharp spike in demand for their dollar bond offers — a respite from liquidity issues in the local markets. Statistics collated by BS Research Bureau show Indian companies raised $13.74 billion in the first 10 months of calendar 2019.

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Indian companies are witnessing a spike in demand for their dollar bond offers, a respite from ongoing liquidity issues in the local markets.

Statistics collated by Business Standard Research Bureau shows Indian companies raised $13.74 billion in the first 10 months of calendar 2019, as against

$1.65 billion raised in the same period of last year. Energy and infrastructure companies are getting a good response from investors, as their track record in debt repayment is better than real estate and telecom companies from India, say bankers.

Indian Oil, Network i2i, Shriram Transport and Adani Port & SEZ, and REC were among the top fundraisers in the current year ( see chart).

“Some of the Indian companies received better credit ratings than the Indian sovereign ratings, making it easier for Indian corporates to tap the overseas markets,” says a banker. These bonds are traded in the secondary market, where sentiment on debt being repaid play san important role in market price.

“Post launch of the bonds, these (energy and infrastructure) companies are trading at a good price, giving confidence to both investors and companies to launch new paper,” the banker adds. Adani Green raised 20-year-old green bonds worth $363 million in October and received offers worth $2 billion.

With rising M&A activity, Indian companies are getting direct access to newer markets and better technologies. This would enable them to increase their customer base and achieve a global reach. “The changing demographic landscape, constant improvement of product and offerings mix augur well for companies and ultimately India’s economy and foreign portfolio investors are betting big on its success,” says a banker, who helped Indian firms to raise funds overseas.

Last week, IFR reported the market price for bonds issued by one of Adani’s Abbot Point Port Terminal’s 2022 bonds went up by 15 per cent since January this year to touch a record high. This was mainly due to a sharp swing in Australia’s political sentiment towards its coal project. This has fuelled investor confidence in the fixed rate bonds, which have outperformed the bond market benchmarks in 2019, IFR reported. “The global markets from an infrastructure company’s perspective offers a much more friendlier and consistent terms than what the local market offers,” says another banker. “Hence, the dollar bond rush.”

Indian Oil, Network i2i, Shriram Transport and Adani Port & SEZ, and REC were among the top fundraisers in the current year