Dollar Bonds: Drop in US yields, stable market boost India rush

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Published: January 16, 2020 2:10:01 AM

Among those who have picked up money include Exim Bank of India, Manappuram Finance, Shriram Transport and Future Retail.

Dollar Bonds, US yields, Manappuram Finance, Exim Bank of India, Kishore Biyani, Future Retail, Power Finance CorporationAmong those who have picked up money include Exim Bank of India, Manappuram Finance, Shriram Transport and Future Retail.

After mopping up a record $21 billion from the overseas bond markets in 2019, Indian firms have raised some $2.3 billion in the first two weeks of 2020. Among those who have picked up money include Exim Bank of India, Manappuram Finance, Shriram Transport and Future Retail.

While Exim Bank raised a billion dollars, Manappuram Finance raised $300 million. Shriram Transport Finance, on the other hand, launched its first international social bond issuance through which it raised $500 million. Kishore Biyani’s Future Retail, in its debut bond transaction, raised $500 million.

 

On Wednesday, Power Finance Corporation (PFC) received an initial price target (IPT) of 255 basis points over the corresponding treasury yield on its dollar-denominated bonds that have a tenor of 10.25 years, sources aware of the deal told FE. The final price target on the issue is believed to be close to 227.50 basis points over the corresponding treasury yield. However, FE could not independently verify the same. Sources also told FE that ReNew Power is believed to have commenced roadshows for its bond issue that is likely to get priced in the coming weeks. The firm may be looking to raise close to $400 million, said a bond dealer aware of the matter.

Novelis, which is a wholly-owned subsidiary of Aditya Birla group’s Hindalco, and is headquartered in the United States, also raised $1.6 billion through bonds recently.

Experts pointed out that several factors have contributed to the rash of bond issues from India. “The US-China trade deal is expected to bring in some stability and tensions related to US-Iran did not flare up. Moreover, US treasury yields have also come down from the end of December,” said a bond dealer. The yield on the 10-year US treasury has come down by 12 basis points since end of December and is currently trading close to 1.79%.

Foreign currency bond issuances out of India had hit a record high in 2019, crossing the $21 billion-mark for the first time. The previous high was recorded in 2014 at around $18 billion. Considerable demand for Indian paper among foreign investors, contracting spreads, relaxation on ECB guidelines by the Reserve Bank of India (RBI) as well as falling US treasury yields had aided more issuers to explore the dollar bond market.

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