According to the data collected by Prime databases, companies and banks have raised Rs 45,237.15 crore this year so far, compared to Rs 77,845 crore in the same period last year.
Higher US yields, especially at the shorter end of the curve, coincided with a weakening
Because of this, most companies choose the domestic market for fundraising.
For example, NTPC recently raised a 10-year onshore rupee bond at an aggressive 7.44 percent annualized yield and
Foreign fundraising hasn’t stayed cheap now after the
For example, the US Fed raised interest rates by 75 basis points for the second month in a row in July. In doing so, they have cumulatively increased 150 basis points over the past two months due to rising inflation.
As a result, the yield is
There is also currency risk for issuers as the rupee depreciated to all-time lows before rising due to various international signals.
Meanwhile, ECB loan data also suffered a major setback according to April’s monthly data.
However, a large number of ECBs are on the cusp of corporate renewal, which could prompt companies to refinance their existing loans, both abroad, especially for natural hedge issuers and some in onshore markets.
According to the ICRA, foreign issuance in FY2023 is questionable due to high borrowing costs resulting from a rapid rise in foreign exchange benchmark rates, as well as tighter liquidity conditions globally.
While the private bank issued AT-I in the foreign market in FY2022 for a total of Rs 128 billion, domestic AT-I issuance gained momentum as the Center’s approval for most banks came in H2 FY2022, as public banks require prior government approval before issuing AT-I bonds.
Issues totaled Rs 300 billion with demand coming from corporate treasuries, family offices and high net worth individuals as well as some private banks.
Market participants expect companies and banks to raise funds through the domestic corporate bond market as both onshore and offshore financing costs have risen.
“We expect more and more corporate bond issuers to tap into the domestic rupee bond market as both onshore and offshore borrowing costs are high,” added Srinivasan.
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