India’s high-yield borrowers tap offshore bonds as investor appetite improves

By Bhakti Tambe and Scott Murdoch

MUMBAI/SYDNEY (Reuters) – From renewable energy to monetary companies, a variety of Indian debtors are readying to faucet the high-yield offshore bond market, profiting from sturdy investor urge for food amid a drop in provide from Asian friends, bankers stated.

The elevated curiosity, seen in sturdy subscriptions for points this yr, is prone to push up offshore bond fund elevating by Indian companies after it hit a 14-year low in 2023.

“We anticipate there to be $15 to $20 billion in India greenback denominated bonds in 2024, which is near the record-breaking years we’ve seen previously,” Rishi Jalan, head of Asia-Pacific debt syndicate at Citigroup stated.

“We might anticipate round 30% to 35% of that quantity to be excessive yield.”

Indian corporations offered a document $21 billion greenback bonds in 2019, based on LSEG knowledge.

Excessive-yield issuers comparable to Delhi Worldwide Airport, which runs the principle airport in India’s capital, renewable energy companies Greenko and SAEL, and Oravel Stays – the promoter of hospitality startup OYO – are among the many companies in early talks to difficulty greenback bonds, 4 bankers stated.

Monetary sector companies Indiabulls Housing Finance and Shriram Finance are additionally in talks, these bankers stated.

Whereas discussions are at early levels, these corporations could start by elevating $300 million-$500 million every, with proceeds normally doubtless for use to refinance debt.

The businesses didn’t instantly reply to emails in search of feedback.

“Lack of ability of sure geographies (like China and Indonesia) to entry the market and the final optimism round India helps Indian high-yield debtors entry the market,” Shoaib Ahmed, director of debt capital markets at ANZ, stated.

Between January and March, issuers together with prime lenders State Financial institution of India and HDFC Financial institution raised a complete of $3 billion by way of greenback bonds.

Excessive-yield issuers IRB Infrastructure Builders and Adani Inexperienced Vitality noticed sturdy response to their choices, with bids at seven-to-eight occasions the problem measurement.

“Buyers are nonetheless cautious about China’s financial outlook whereas India progress story appears promising from a worldwide EM perspective,” Eric Liu, credit score desk analyst at Nomura, stated.

With improved demand, the price of elevating such funds is near 9% for high-yield issuers, which is corresponding to elevating funds within the home market, stated Nomura.

The pool of traders has additionally widened in latest offers to incorporate sovereign wealth funds and actual cash traders who beforehand invested in issuers from Latin America, Central and Jap Europe, the Center East and Africa, Citigroup’s Jalan stated.

“On the core is the sturdy fundamentals of Indian excessive yield company, stability of financial insurance policies with potential win for the incumbent get together within the normal elections and the inclusion of Indian bonds in world indices,” Sanjay Guglani, CIO of Singapore-based Silverdale Capital, stated.

(Reporting by Bhakti Tambe and Scott Murdoch; Modifying by Mrigank Dhaniwala)

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