Indian firms line up Singapore dollar bond issues

By: | Published: April 21, 2015 12:16 AM

The SGD market does not have the kind of depth that the dollar market has. This, coupled with the swapping cost, may be the reason why there was no bond issue by any Indian company or bank last year in SGD

Conspicuous by their absence in 2014, Singapore dollar bond issues from India are likely to make a comeback this year, with at least three Indian companies or banks lining up to raise funds, a foreign banker close to the development has told FE.

“Last year, there were no Singapore dollar bond issues from India. This year, we have a pipeline that is not bad, but we are waiting for the right levels. We have at least three Indian companies who are in line to issue bonds in Singapore dollar,” the banker said.

The last time an Indian company/bank had issued bonds in Singapore dollar was in early 2013, according to Bloomberg data, which shows that ICICI Bank-Dubai had issued bonds worth singapore dollar (SGD) 225 million.

Bankers said the cost of swapping the SGD with rupee might have been the main issue why companies shied away from issuing SGD bonds last year.

“Everything depends on the cost of swapping the funds with rupee. If that is very high, it does not make sense to issue bonds in that particular currency. Despite the cost, if a company raises funds in a particular currency, they must have an end use for it like an asset or operations in that country where the funds could be utilised,” a foreign banker said.

past-issu

The SGD market does not have the kind of depth that the dollar market has. This, coupled with the swapping cost, may be the reason why there was no bond issue by any Indian company or bank last year in SGD, another foreign banker said.

Market participants noted that any corporate that wished to raise a huge quantum of funds is unlikely to do so in SGD-denominated bonds. “It would be hard to go out and raise $500 million or $1 billion in SGD, as you may not get enough investors for these bond issues,” the banker said.

Indian companies have so far raised close to $3.7 billion through offshore bond issues this calendar year with almost the entire quantum being raised through dollar-denominated bonds.

Reliance Industries, Exim Bank, Delhi International Airport and Lodha Group are some of the companies that have raised funds through offshore bonds this year.

In 2014, Indian companies raised a record $18.6 billion from the offshore market. Bond market experts are expecting the figure to cross $20 billion this year.

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