Indian lenders double fundraising via infrastructure bonds on capex push

JM Financial

19/12/2023 05:37

By Dharamraj Dhutia and Bhakti Tambe
       MUMBAI, Dec 19 (Reuters) - Indian lenders doubled the
amount of funds raised via longer-term infrastructure bonds this
year, as increased federal government spending on long-term
projects created lending opportunities.
    Banks raised over 584 billion rupees ($7.04 billion) via
infrastructure bonds in 2023 compared to 296 billion rupees
raised in 2022, data compiled by Reuters showed.
    India's largest private lender HDFC Bank raised 74.25
billion rupees through 10-year bonds at an interest rate of
7.71% on Monday.
    The bank did not respond to a Reuters email seeking comment.
    Peers Axis Bank and ICICI Bank are likely to raise 50
billion rupees each before the end of the month, while state-run
institutional lenders NABARD and NaBFID will look to raise 100
billion rupees each through such offerings later this week,
merchant bankers said.
        State-run lenders have raised 447.18 billion rupees via
such papers, while private players have raised 137.15 billion
rupees.

The federal government aims to spend 10 trillion rupees this
fiscal year on long-term projects to boost growth. Spending by
states has also picked up.
    Sectors such as roads, thermal power, renewables and cement
are seeing a pick-up in activity, leading to lending
opportunities, said Arnab Choudhury, head of debt capital
markets at SBI Capital Markets.
    The construction sector is also selectively seeing more
spending, said Choudhary, who expects fundraising via
infrastructure bonds to remain strong into next year.
 Lender               Tenor in   Month   Quantum in      Coupon
                      years              billion rupees  in %
 SBI                         15  Jan              97.18    7.70
 Kotak Mahindra Bank          7  Mar                  3    7.63
 Kotak Mahindra Bank          7  Jun               19.9    7.55
 SBI                         15  Jul                100    7.54
 SBI                         15  Sep                100    7.49
 Canara Bank                 10  Sep                 50    7.54
 ICICI Bank                  10  Sep                 40    7.57
 Canara Bank                 10  Nov                 50    7.68
 Bank of Baroda              10  Nov                 50    7.68
 HDFC Bank                   10  Dec              74.25    7.71
    Infrastructure bond issues have seen active participation
from long-term investors such as retirement funds and insurance
companies, allowing for such funds to be raised at lower
spreads, said Mataprasad Pandey, vice president at financial
advisory firm Arete Capital. 
    The spreads, or additional interest sought by investors, has
ranged from 20-40 basis points over comparative government
bonds. 
    Infrastructure bonds fulfil the need for investments in the
7-10 year bucket for insurance companies, Rahul Bhuskute, chief
investment officer at Bharti AXA Life Insurance, said.
    "We expect more infrastructure bond issuances by banks with
strong demand from insurance companies and pension funds."
    

($1 = 82.9975 Indian rupees)

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Indian banks double fundraising via infrastructure bonds in 2023
   https://tmsnrt.rs/3tfyTJ7
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 (Reporting by Dharamraj Dhutia and Bhakti Tambe; Editing by
Janane Venkatraman
)
 ((Dharamraj.Dhutia@thomsonreuters.com;))