Record $32 billion raised in 2025 through overseas syndicated loans

Pipeline robust as firms look at more acquisitions

Indian companies, including lenders, raised a record $32.5 billion overseas through syndicated loans last year, which were largely on account of sponsor financing, demand from financial firms, increased activities in the mid-market, and large 

acquisitions. 

People from industry said this was expected to continue this year. Activity in the bond market for dollars may pick up after a subdued 2025, amid the growing expectation of interest rates in the United States (US) coming down. 

“The market of such loans will be driven by firms particularly those in the mid-market space and looking to grow through acquisition. This should bring in new sectors and structures,” said Chetan Joshi, managing director and head, debt financing, HSBC India, adding that the bank would look to capitalise on growth opportunities in India. “Demand for high-quality Indian names on the part of international banks has resulted in a sharp compression in spreads for new foreign-currency borrowing, further driving up volumes,” he added.  HSBC last year was the top book-runner in the loan market. The data shows that of the $32.5 billion raised, over $12.5 billion was for corporate financing while financial institutions, including banks and non-banking finance companies (NBFCs), drew in more than $10 billion. 

Over $9 billion was for sponsor-event deals. Sponsor financing refers to loans to financial sponsors, including private-equity firms, venture capitalists, or investment funds, to support their acquisition or investment.

 

Financial institutions, accounting for 42 per cent of offshore issuance volumes, dominated the market. This was led by a record 108 per cent year-on-year growth rate in NBFCs’ offshore syndication deals. Experts pointed out that the number of new companies tapping the syndicated loan route was growing.

 

In comparison, funds raised through offshore bonds were worth $7.8 billion, down 37 per cent over last year.

 

In 2024, nearly $26 billion was raised via syndicated loans. This was against $31.6 billion in 2023.

 

According to Joshi, Indian firms prefer syndicated loans because of the flexibility those offer in drawdown and prepayment, as well as the option of being able to borrow in smaller amounts. The bond market generally requires a minimum size of around $300 million. And in 2025, there were several borrowers who accessed the loan market in the region of $100 million-300 million, he said.

 

Additionally, experts suggested while the rates of bonds were fixed, loans had a floating rate, and there was a view, especially among those who had dollar revenues and who might not hedge their liabilities, that borrowing via floating-rate instruments made sense in an environment where there was an expectation of rate cuts in the US. In that case they would benefit from a lower absolute rate, which would not be the case if they locked into a fixed-rate bond.

 

However, Joshi said the bond market in dollars this year would likely grow, driven by changes in guidelines on external commercial borrowing (ECB), pentup demand from investors, and the expectation that US rates would fall.

 

Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap LLP, said: “Over 2025 syndicated loans raised offshore, largely through the ECB route, were preferred to domestic and offshore bonds. This trend was most evident among financial institutions and public-sector entities, particularly those with natural cash flows in foreign currencies or well-established hedging frameworks.”

 

“An important factor is the pricing advantage of syndicated loans over offshore bonds. Issuing foreign-currency bonds exposes borrowers to volatile global-investor sentiment, higher costs of issuances and compliance, and the risk of unfavourable pricing if market conditions deteriorate. In contrast, ECB-linked syndicated loans are largely relationship-driven and bank-led. For repeat borrowers with established overseas banking relations, these loans often offer more predictable pricing and a lower all-in cost than offshore bond issuances,” he said.

 

Meanwhile, experts have pointed out the significant increase in syndicated loans can be linked to the increase in foreign investment leaving India since a chunk of these loans are being used to fund overseas acquisitions by Indian firms.

 

According to the Reserve Bank of India data, in April-November last year, overseas investment by Indian companies and repatriations by foreign investors totalled $59.1 billion, up from $55 billion in April-November 2024. Of this, overseas investment by Indian companies was $22.1 billion.