India’s national elections are still about four months away, but they are already fueling bets that companies looking to raise dollars this year will rush to do so before the voting starts.
Some investors say a sell-off in Indian dollar bonds last year has created bargain hunting opportunities, and issuers will likely want to make the most of that sentiment before the polls open, as any surprises could push up financing costs later.
“Borrowers would like to fund themselves before the elections, just to avoid any uncertainty,” according to Augusto King, head of capital markets group for Asia at MUFG Securities. “We think India dollar bond issuance could pick up this year.”
Two of India’s largest public sector companies have been among the first in Asia to turn to the dollar note market this year. Indian Oil Corp., the nation’s biggest fuel retailer, will start a roadshow from Jan. 7 for a dollar security, according to a person familiar with the matter. State Bank of India, the country’s largest lender, hired banks for a planned dollar issuance, another person with knowledge of the matter said.
Prime Minister Narendra Modi is seeking re-election this year, after electoral losses in three key stronghold states last month, adding to uncertainty that the results in national polls could risk delaying economic reforms sought by foreign investors.
Volatility in emerging-markets last year kept most Indian issuers away from the offshore bond markets. Foreign-currency bond sales dropped 60 percent to $6.6 billion in 2018, the lowest since 2009.