So far in 2013, Indian companies raised $4 billion by issuing bonds in the international market in order to take advantage of lower interest rate compared with the domestic bond market.
According analysts, India Inc may continue to tap the overseas bond market in order to meet their funding requirement and some analysts expect $10 billion foreign bond issue by Indian firms till the end of 2013.
In the last few months, companies like Reliance Industries, ICICI Bank, HDFC Bank, Bharti Airtel, Tata Communications raised through bond issue in the international market.
Data from issue arrangers reveal that Indian firms raised about $10 billion by way of international bonds in 2012 and some expect 50 per cent higher issue in 2013.
Owing to a fall in international treasury yields, the coupon rates for raising international bonds have dropped significantly. Issuances have picked up because the market is becoming so much wider and deeper. It’s a reflection of the deepening of the debt capital market globally.
Companies are expected to raise funds through bond issue as soon as possible anticipating US treasury yields to rise over the next six months.
The US is showing signs of growth. If the economy starts to power up at a faster pace, the US Federal Reserve will be forced to scale back some of its quantitative easing measures. This could raise yields on US treasury bonds.