Indian Bonds Raise $6 Billion in Foreign Bonds in First 2 Weeks of Jan-22

It was a record breaking first fortnight of Jan-22 for Indian bonds. Indian companies raised a record $6 billion via bonds in the offshore market in the first 2 weeks. This shows the confidence that global investors have reposed on Indian debt paper, a narrative on improving credit view on Indian corporate debt and expectations of a stable rupee.

Most of the companies that raised bonds in the global market in the first fortnight of Jan-22, managed to pay coupons that were 30-35% lower than the normal levels. This helped tighten their funding costs. Some of the Indian companies borrowing aggressively in the offshore bond market included Reliance Industries, SBI, JSW Infrastructure, Shriram Transport Finance Ltd and India Clean Energy.

The surge in interest in Indian debt paper is interesting since most of the global investors have been rather lukewarm towards Chinese debt paper. The tightening yield spreads is also al indication that the credit perception of India at a macro level and of companies at a micro level have improved significantly.

The offshore bonds in the first fortnight worth $6.03 billion were nearly 3 times the amount of money raised via bonds in the previous year first fortnight. The rupee has also strengthened from around 76/$ to around 74.60/$ in the last few weeks. At the same time, the ratio of credit upgrades in India has also been on the ascendant in the last one year.

Out of the Indian companies that raised a total of $6.03 billion, nearly two-third of the fund raising or $3.96 billion was accounted for by Reliance Industries. Among the other major fund raising deals, IRFC raised $500 million, Shriram Transport $475 million, India Clean Energy $400 million, JSW infrastructure $400 million and SBI London $300 million. 

In the whole of 2021, Indian companies raised $22 billion via offshore bonds. By that comparison, year 2022 has raised nearly one-fourth of the full year bond borrowings of 2021 in the first 15 days itself. Most global investors have been wary of Chinese bonds due to the combined impact of the FED hawkishness and the likely spill over effects of the Evergrande crisis. India has gained from these sentiments.

For the issuers, the timing was right. For high quality borrowers it was possible to raise funds at short notice at attractive rates before the rate hike sequence starts. Most institutional investors have also been betting on a revival in Indian growth. The plot surely fits in to perfection.

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