Barclays Capital jumped 24 places, the biggest climb by any bank in 2010, to become the No 4 bond underwriter in India, after it arranged sales to fund the nation’s growing need for transport and energy infrastructure.
The investment banking unit of London-based Barclays Plc helped borrowers issue Rs 14,700 crore ($3.3 billion) of bonds this year, compared with Rs 390 crore in all of 2009. Almost half the money raised was for companies including Rural Electrification Corp, Tata Power Co and Indian Railway Finance Corp that are building or funding road, power and rail projects.
“We expect increased issuance from infrastructure companies next year,” Jaideep Khanna, managing director and head of investment banking at Barclays’ India unit, said in an emailed response to questions on December 3. “Overseas investors’ interest in Indian credit is increasing” and the bank expanded its origination, trading and sales teams to help meet that new demand, he said, without being more specific.
The companies raised a record Rs 1.7 lakh crore from bonds this year in an economy that New York University Professor Nouriel Roubini predicts may expand more than China’s in the next decade, if the state develops public infrastructure and removes barriers to foreign investment. Prime Minister Manmohan Singh’s government plans to invest about $1.5 trillion in the 10 years to 2017 on improving India’s transport and power networks, which are ranked below those of war-ravaged Ivory Coast.
New projects
The environment ministry approved construction of a Rs 15,000 crore second airport in Mumbai last month to increase the allure of the nation’s financial capital, Civil Aviation Minister Praful Patel said on November 22. Five road projects worth a similar amount will be awarded to developers by April, Roads and Highways Minister Kamal Nath said on November 30.
Elsewhere in the credit markets, 10-year government bonds fell last week by the most in more than five months, as a shortage of cash in the banking system reduced demand for debt. Rural Electrification, the state-controlled lender to power projects, postponed a $500 million bond sale to January because of what an official called “adverse market conditions.”
The banks’ loans rose by Rs 27,270 crore in the two weeks ended November 19, raising outstanding advances to Rs 35.6 lakh crore, according to the Reserve Bank of India (RBI) data.
Policy review
The yield on the 7.8 per cent India note due May 2020 rose 21 basis points last week to 8.18 per cent in Mumbai, according to RBI’s trading system. It touched 8.13 per cent on December 2, the highest level since October28.
“Investors seem to believe the central bank may not take any measures to ease liquidity until the next policy review on December 16,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank in Mumbai.
Rural Electrification Corp had hired Credit Agricole CIB, Royal Bank of Scotland Group Plc, and Standard Chartered Plc to manage the company’s bond sale until the Irish debt crisis and tensions in the Korean peninsula forced it to postpone the offering, Finance Director Hari Das Khunteta said in a phone interview on December 3 from New Delhi.
