At $14.7 bn so far, overseas bond sales on pace to set new record

With Bharti Airtel, ONGC Videsh, Tata Steel and SBI hitting the overseas bond markets with $ 1-billion-plus issues, debt raised by 15 domestic companies so far this year is sniffing at the record $ 16.5 billion India Inc had raised in the entire 2013.

Overseas bond sales have touched $ 14.7 billion till date this year, according to the data collated by Deutsche Bank India, which was part of 15 out of the 28 issues by 15-odd companies.

Last year domestic companies had mopped up $ 16.5 billion, up 65% from 2012.

Other merchant bankers are also very bullish about a hefty fee income this year as they see this calendar year to be on course to set new record, thanks to high domestic interest rates and the low interest regime outside, coupled with the sentiment revival in the country post the elections. However, most of the money being raised to repay/refinance these companies high debt burden.

On an average companies gain an interest arbitrage of 500-600 basis points by raising funds overseas, say the merchant bankers.

This spike in international debt raising is happening despite the Reserve Bank putting breaks on companies going to the ECB route in an unbridled manner.

Leading the pack this year is Sunil Bharti-led Bharti Airtel which since January has mopped up $ 2.4 billion in four issuances, followed by the state-run energy major ONGC's overseas arm ONGC Videsh which had on July 8 sold bonds worth $ 2.23 billion to pay back the bridge loan it had availed of to buy 10% stake in the Mozambique oil block.

The third on the top league is the country's largest alloy maker Tata Steel which last Friday sold high yielding bonds worth $ 1.5 billion in a dual tranche issue which was the company's debut US dollar bond sale, followed by the nation's largest lender State Bank's April 10 issue of $ 1.25 billion again in a dual tranche deal.