MUMBAI; Favourable pricing of U.S. dollar bonds issued by India’s biggest lender has spurred expectations of more firms tapping the overseas market, with three companies preparing to raise about $1 billion in total this month, bankers and analysts said.
Indian dollar bond yields have dropped after S&P Global Ratings upgraded the country’s sovereign rating to “BBB” from “BBB-” in mid-August, the first upgrade in 18 years.
State Bank of India sold $500 million in five-year dollar bonds earlier this week at a yield just 75 basis points over that on corresponding U.S. Treasuries — the lowest spread ever for an Indian issuer, Chairman Challa Sreenivasulu Setty said on Tuesday.
“The tight pricing has demonstrated reduction in the borrowing cost for Indian issuers,” Setty said.
India’s rating upgrade, “coupled with potential lower U.S. Treasury yields on expectations of impending Fed rate cuts, might make dollar fundraising relatively more competitive in the near term,” said Shoaib Ahmed, director, debt capital markets at ANZ.
Indian firms tap bond market for acquisitions on mutual fund demand
Two non-bank lenders — Hero Fincorp and Credila Financial Services — and state-run Indian Oil Corp plan to launch dollar bond issues, aiming to raise a combined $1 billion through up to five-year notes, according to bankers.
The companies did not immediately respond to Reuters’ emails seeking comment.
“We do anticipate more issuances over the next four months, both from banks and non-banking financial companies, if current strong market conditions continue,” said Pramod Shenoi, head of Asia Pacific research at research firm CreditSight.
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