India dollar bond party just getting started
mumbai — Dollar bond issuance from Indian companies looks set to accelerate in the New Year off a 2017 record as issuers cash in on bullish investor sentiment and the lowest borrowing costs in a decade.
Dollar-denominated bond sales from India soared almost 90 per cent to an all-time high of $15.2 billion in 2017, Bloomberg-compiled data show. Historically low interest rates and credit spreads have allowed some of the nation’s bestrated companies to access markets Investors are ready to lap up India paper
Asit Bhatia, MD for global corporate and investment banking at the Indian unit of Bank of America Merrill Lynch
at very competitive pricing, according to Bank of America Merrill Lynch. Strong investor appetite internationally will spur further gains in 2018, according to Jay Capital.
“Investors are ready to lap up India paper,” said Asit Bhatia, managing director for global corporate and investment banking at the Indian unit of Bank of America Merrill Lynch. “There is a dearth of good Indian paper in the dollar bond markets.”
Moody’s Investors Service raised India’s sovereign rating for the first time since 2004 in November, amid brightening prospects for the country following a raft of policy changes by Prime Minister Narendra Modi. Since then, order books for Indian dollar notes have swelled, and the rupee’s march toward its first annual gain in seven years against the greenback is further bolstering confidence among companies tapping the dollar bond market, Bhatia said.
ICICI Bank garnered more than $850 million of orders for a $500 million 10-year bond issued this month, while Reliance Industries Ltd’s $800 million offering in November was oversubscribed more than 1.6 times the issue size.
Spreads over Treasuries for Indian dollar bonds fell to 169 basis points last week, the lowest since 2007, according to ICE BofAML index data.
“There is a lot of demand for Indian bonds from international investors, especially in the fiveyear tenor,” said Raj Kothari, London-based head of trading at Jay Capital. — Bloomberg