India corp bond issuance on track to hit record highs this fiscal year: bankers

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08/08/2023 08:37

By Dharamraj Dhutia and Bhakti Tambe
       MUMBAI, Aug 8 (Reuters) - Indian corporates could raise
record funds through bond issuances this year as they take
advantage of attractive interest rates, four merchant bankers
said on Tuesday. 
    "We see consistent supply for the rest of the year with
overall supply surpassing last year's record number," said Arnab
Choudhury - executive vice president and group head of debt
capital markets, SBI Capital Markets.
    Indian companies raised 8.17 trillion rupees in FY23, an
increase of 29% over FY22, data from information service
provider Prime Database showed.
 
    In the months of April to July, firms raised 3.51 trillion
rupees via bonds, of which fundraising in July was the lowest at
539 billion rupees. Bankers said the dip was an anomaly.  
    Expectations of a hawkish U.S. Federal Reserve pushed up
U.S. yields, the effects rippling across emerging markets like
India. That made issuers stay on the sidelines until rates
stabilise, these bankers said.
 
    Abhijit Roy, chief executive officer at GoldenPi, an online
bond portal expects issuance to cross 9 trillion rupees in the
current year, with major focus remaining on fundraising via
shorter duration bonds.
    With interest rates expected to remain stable at least till
March, bankers are betting issuers will avoid delaying their
fundraising plans and keep tapping the debt market. 
    While Jamnagar Utilities and IREDA are scheduled to raise
funds on Wednesday, other lenders like Bank of India and Bank of
Maharashtra are also likely to line up. State-run firms like PFC
and REC could tap the market after the policy, bankers said.  
    Reuters benchmark AAA-rated corporate bond yields for
three-year is around 7.70%, while State Bank of India's
three-year marginal cost of lending rate (MCLR) stands at 8.15%.
    SBI Caps' Choudhury said companies that had raised funds via
external commercial borrowings last year will shift to local
markets as yields have risen. 
    "The next five to six months should be a busy period...Loan
markets are not attractive right now because MCLR rates have
moved up, and hence highly rated issuers will continue to come
to bond market."    
    Sujata Guhathakurta, president-debt capital market and
infrastructure financing at Kotak Mahindra Bank said corporates
would raise debt for refinancing and capex purposes as the
current flat yield curve would ensure short-term and long-term
money at almost similar levels for higher-rated firms.

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Corporate bond fundraising dipped in July   
https:/www.reuters.com/graphics/INDIA-MARKETS/gkplxwkjwpb/chart.
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Indian companies' fundraising via pvt placement of bonds   
https:/www.reuters.com/graphics/INDIA-MARKETS/akveaqyervr/chart.
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 (Reporting by Dharamraj Dhutia and Bhakti Tambe; Editing by
Swati Bhat and Nivedita Bhattacharjee)
 ((Dharamraj.dhutia@tr.com))