ICICI Bank is now top arranger of bond issues

Helped India Inc collect almost half of funds raised locally in FY12

ICICI Bank has emerged as the top arranger of domestic bond issues. The country’s largest private sector bank was the number-one arranger in 2011-12, helping India Inc raise close to Rs 1,04,569 crore via bonds and non-convertible debentures, almost half the funds raised by local companies through this route, according to data with Prime Database Group.

The bank participated in 123 transactions, 26 more than it did in the previous financial year. ICICI Bank was followed by Axis Bank, which was top in the arrangers’ league table in 2010-11. ICICI Bank was actually no better than 10th in this respect as recently as 2008-09. It moved up to third position the following year and to second in FY11.

In the past couple of years, several Indian companies have tapped the corporate bond market to meet funding requirements as bank loans turned expensive due to successive rises in interest rates. Indian companies raised close to Rs 213,578 crore via bond sales in 2011-12, about 24 per cent higher than the previous year. Several new issuers entered the market, including IL&FS Financial Services, Shriram Equipment Finance Company and SEW Infrastructure.

HOW THEY FARED Top arrangers of domestic bond
Bank	Ranking		Total no of issues in ‘11-12
	FY11	FY12
ICICI Bank	2	1	123
Axis Bank	1	2	134
Trust Inv	4	3	116
ICICI Sec PD	3	4	97
Darashaw	7	5	64
* Ranking based on total amount of transactions Source: Prime Database

The momentum has continued in the current financial year after the 50-basis points cut in the repo rate by the Reserve Bank of India (RBI) in April 2012. Hindalco Industries tapped the market after a long while and Tata Group companies such as Tata Steel and Tata Motors raised funds by selling bonds in the local market.

The downgrade on India’s sovereign rating by Standard & Poor’s (S&P) is expected to keep Indian companies’ interest in the domestic bond market, as the revision in outlook is likely to make international borrowing more expensive. “It will affect the international lending rates for India and the cost of borrowing from abroad would rise,” said Abhishek Goenka, founder and chief executive of India Forex Advisors.

S&P had in April downgraded India’s outlook to negative from stable, saying the economic indicators were bleak and fiscal health was poor.

A section of the market, however, feels high government borrowings may crowd out private fund raising programmes in the current financial year, as the liquidity situation continues to remain tight.