Rating agency Fitch today said it expects Indian corporates to increasingly access offshore debt markets to meet their funding requirements...
Rating agency Fitch today said it expects Indian corporates to increasingly access offshore debt markets to meet their funding requirements.
The offshore bond issuances by non-financial Indian corporates is estimated to have crossed USD 13 billion so far in 2014 as against around USD 9 billion in 2013.
“The offshore capital markets are increasingly attractive to Indian corporates partly because of better pricing for their bonds,” Fitch Ratings said in a statement.
The growth in access to bond market is likely to be driven by the need to refinance debt and fund capex once the investment cycle restarts, it added.
The offshore markets now present a relatively more cost-effective funding source as compared with onshore funding for Indian corporates, it said.
Also the reduction of withholding tax on interest payments of offshore bonds to 5 per cent with effect from July 2014, compared with 20 per cent earlier, has incentivised investment in such instruments.
“Investor demand for Indian bonds has also been strong due to expectations of improvement in Indian economic growth, improved political stability and strong liquidity in global capital markets,” Fitch added.