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Firms likely to raise $5 billion through dollar bond sales in January

In India, Export Import Bank of India raised $1 billion, State Bank of India garnered $600 million, and Shriram Transport about $500 million

Topics
US-dollar bonds | foreign funds | Banking sector

Abhijit Lele  |  Mumbai 

RBI intervenes to protect falling rupee
Five-six companies across sectors like renewables and financial services are in different stage of talks, and documentation is underway.

Foreign fund-raising activity by Indian entities has begun on a strong note with bank and financial institutions mopping up $2 billion in the first week of the new year. Many Indian corporate houses are in advanced stages of resource mobilisation, which may take the fund-raise tally to $5 billion in by early February, investments bankers said.

Fund-raising volumes across the globe, especially through dollar bonds, was the highest ever in 2020, and the first three sessions of 2021 witnessed about $50 billion in fund-raising.

In India, Export Import Bank of India raised $1 billion, State Bank of India garnered $600 million, and Shriram Transport about $500 million. This was done without conducting roadshows.

They were able to tighten the price guidance by 20-45 basis points (bps) compared to initial price guidance. Like in the case of SBI, the price guidance was revised from T+175 bps to T+140 bps on the back of strong demand.

Sunil Khaitan, India head, Global Capital Markets, Bank of America, said it has been good start to the new year from a fund-raising perspective. Three deals have been executed in the first week of January. This is a precursor to the deal activity that will happen through this month and hopefully during the year.

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“We are seeing a convergence of low underlying rates, compressed spreads and a pickup in capex — conditions that are very conducive for fund-raising,” he added.

Five-six companies across sectors like renewables and financial services are in different stage of talks, and documentation is underway. Many decisions on fund-raising were delayed last year.

Pramod Kumar, managing director and head of banking, Barclays, said the risk appetite is back. It is evident in the equity market and this is flowing into credit market as well, he said, adding that global investors want to take exposure to emerging markets.

Within Asia, the three high yield markets are India, Indonesia and China. India will be a beneficiary of flows as investors look for opportunities beyond China.

Plus, there are apprehensions about the fresh surge of Covid-19 across Europe and the US. In this backdrop, India is a country that has managed the outbreak better with low incidence of infection and mortality rate, said a senior executive at a public sector bank.

Echoing him, David Rasquinha, managing director of Exim Bank, said, with the upsurge in goods services tax numbers, improvement in gross domestic product, and the recent approval of vaccines, the confidence in the India story is surging again.

The overseas fund-raising at low rates would help reduce the cost of funds. The direct use of funds for capital expenditure will be limited and a lot of money would go towards refinancing bonds and instruments that mature in 2021.

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First Published: Sat, January 09 2021. 01:26 IST
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