RBS sees tepid growth in overseas bond sale by domestic cos

Mar 30 2014, 16:14 IST
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SummaryA new stable government at Centre post elections will not result in any renewed surge in overseas debt raising by domestic companies.

A new stable government at Centre post elections will not result in any renewed surge in overseas debt raising by domestic companies and the deal flows may increase by 10-15 per cent next fiscal, said a top official of leading i-banker Royal Bank of Scotland.

"I think the surge in equity markets post-elections will result in higher interest for IPOs but the overseas bond raising will be about the same size as this year...may be we can have a 10-15 percent surge," RBS Managing Director and Head of International Banking for India and Southeast Asia Brijesh Singh told PTI over the weekend here.

Many analysts are of the view that domestic corporates hitting the overseas debt market will taper off as interest rate benefits, that is the major consideration for such deals, no longer exist in the overseas markets following the US Fed tapering since November.

In fact, the interest rates in the western markets started inching up mid-May last when the then Fed chairman Ben Bernanke said he would start reducing its bond buying by USD 10 billion every month, which finally stated in November.

After this only a handful of companies like ICICI Bank, HDFC Bank, Exim Bank, IRFC, IDBI Bank and Bharti Airtel among others sold bonds overseas worth USD 3 billion. Claiming that RBS tops the list of deal arrangers, he said FY 2013 was a good year where the investment bank helped domestic corporates raise around USD 15 billion, but said it would have narrowed down to USD 10-11 billion this fiscal, and may grow only marginally in FY2015. Most of the money raising will be done by corporates for their refinancing requirements and also by the state-run companies for acquiring assets abroad, he said.

Additionally, there shall also be interest from banks which are benefiting from the Basel-III framework under which such a debt raising is considered as equity, he said.

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