Indian companies have raised $14.3-billion debt offshore so far this calendar year, nearing last years overall figure of $14.4 billion.
In July alone, three Indian companies raised $2.4 billion through high-yield bonds. On a single day (July 24), three lower rated companies Tata Steel, GreenKo and Global Cloud Xchange hit the bond market. Tata Steel raised $1.5 billion in a dual tranche deal, and the bonds were priced at 4.85% for a maturity period of 5.5 years and the 10-year issue was sold at a coupon rate of 5.95%. Hyderabad-based renewable energy producer GreenKo raised $550 million late July at 8% for five-year money. Global Cloud Xchange raised $350 million by issuing 5-year tenure bonds at a coupon of 7 %.
Though Rolta Indias $300-million five-year bonds were the highest yielding with a coupon of 8.875% in early July. Late June, auto components maker Motherson Sumi sold Euro bonds worth $682 million at 4.125%.
Bankers feel Indian companies could raise $20 billion through bonds this year, citing high demand. With increased optionality for companies, tighter spreads and the equalisation of withholding tax for overseas bonds, we expect further issuances, said Manmohan Singh, head of debt capital markets for India at Royal Bank of Scotland (RBS). Spreads on Indian paper have contracted to their lowest levels since 2007, tightening by about 100-150 basis points in the past nine months. ICICI Bank raised $250 million at 185 basis points over five-year US treasury. ONGC Videsh raised $2.23 billion through its issue of dual-currency foreign bonds, the largest offshore issue so far this year. ONGC raised money through three equal tranches of five-year US dollar bond, 10-year US dollar bond and seven-year euro bond. It last raised such bonds in April 2013.