Jan-Feb overseas bond sales by cos highest since ’95

MUMBAI: The Adani Group, Vedanta and Bharti Airtel are at the vanguard of overseas bond sales lately by Indian companies, which together mobilised record funds offshore in the first two months of this year to underscore the pressing need for expansion capital that would undergird the V-shaped recovery underway.

At nearly $9 billion, the funds garnered dwarfed overseas fundraising efforts in the same period since 1995, show data from Dealogic, an analytics firm based out of Hong Kong. The quantum of bond sales, coinciding with a global effort to clamber out of the Covid sinkhole, underscores the undiminished allure of overseas markets for fundraising despite record low interest rates at home.
Offshore sales enable bond issuers to raise larger sums and diversify their debt investor base.

Shriram Transport, IRFC, PFC, State Bank of India, and Exim Bank were among others that either refinanced or raised funds for capex.

“The international bond market has been the preferred funding route for Indian issuers over the last couple of months,” said Shashank Joshi, head of global corporate banking for India, MUFG Bank, one of the largest Japanese banks. “In the new year, investors have been actively looking to put their money to work, and India credits offer reasonable returns for yield-hungry investors.”

Bharti Airtel raised about $1.25 billion overseas via two sets of global papers — perpetual and vanilla bonds. The sales received bids worth over $2.5 billion last week.

While the first set of bonds offered around 4%, the other series was priced after adding 187.5 basis points over the 10-year US Treasury. Overall, these levels were about 35-43 basis points lower than the initial guidance.

Indian companies are primarily rushing to the G3 (sales of bonds in US dollars, euros and yen) and HY (high yield) bond markets since the start of the year.

“With the surplus liquidity around the world and muted credit offtake, investors are chasing quality issuances, bringing down the credit spreads,” said Citibank India’s head of Corporate Banking Group, K Balasubramanian. “Most deals continue to be priced at very tight spreads over secondaries. Several Indian corporates and financial institutions are locking long-term financing at attractive levels.”

US treasuries, although higher from August, are still attractive from the yield standpoint. The US benchmark gauge yields 1.45%, nearly trebling since August. But it is still far from its near-term peak at 3.23% on October 1, 2018.

“We expect this trend to continue in 2021 and this could be a record year for India’s foreign-currency issuances,” said Citi’s Balasubramanian.

Billionaire Anil Agarwal’s Vedanta Resources raised about $1.2 billion via sale of overseas bonds, for which it received bids up to $3 billion. The bonds yielded 8.95%, about 43 basis points lower than the initial guidance.