Lodha Developers has pushed its plan to raise funds from the overseas bond market to 2015 after its maiden dollar bond issue failed to garner strong response from investors.
“We have decided to postpone the issuance to early 2015 in view of the current market conditions for other Indian bonds,” said the company in a statement on Wednesday.
Bankers cited multiple factors for the delay, including the growing wariness among investors towards high-yielding sub-investment grade Indian papers recently. This wariness stems from a recent RBI notification that banned banks and companies from guaranteeing bonds issued by their overseas subsidiary.
RBI, in a November 25 notice, had said that banks and companies cannot guarantee bonds issued by their overseas subsidiaries. The central bank had found that some companies route overseas funds through such bond issuances to domestic operations that are not allowed under current rules.
The bonds offered by Lodha Developers was to be issued by the company’s Mauritius arm with a guarantee of the parent company. Lodha Developers have a rating of ba3 by Moody’s. The sovereign rating of India is baa3 by Moody’s.
“In the case of Lodha, the yield demanded by investors was around 10% which could have been higher for the issuer,” said a bond arranger with a UK-based bank. Besides Lodha Developers, Reliance Communications too had launched a bond issue earlier this week which the company shelved. Reliance Communications was looking to raise close to $225 million through dollar bonds and had given a high yield guidance of 6.5%.