India Inc’s overseas bond sales likely to revive in 2021

Mumbai: Overseas corporate bond sales, which nearly halved through 2020 despite global yields slumping to the floor, could revive next year as Indian companies regain sufficient confidence in the broader reconstruction to seek debt capital at global financial hubs that are facing a liquidity glut. “Massive onshore liquidity enabled issuers to tap the longer end of the curve at tighter prices,” said Shashank Joshi, head of global corporate banking at MUFG Bank. “The Covid situation caused some stress with offshore investors who were concerned about the potential impact of a sovereign downgrade. Heading into 2021, we could see some of those concerns going away with vaccination hopes stronger than ever.”About two dozen Indian companies collectively raised $14.01 billion this year, down from $26.5 billion last year, show data from Dealogic, a global analytics firm. In India, the central bank pumped in more than enough cash into the banking system to keep local interest rates at record lows.Vedanta Resources Finance, Vedanta Holdings Mauritius, Adani Ports, Power Finance Corporation, Indian Railways Finance Corp, Future Retail and Muthoot Finance are among the top issuers during the year in terms of size.Coupons offered by issuers were in the wide range of 3% to 13.87%, with Vedanta group companies offering double-digit rates. “There was a global pause which was the consequence of a once-in-a-generation pandemic that reset the equilibrium among issuers, investors and markets,” said Amrish Baliga, Managing Director at Deutsche Bank. “We anticipate the demand for yield to continue into 2021 for Indian paper.”Most global investors now see good relative value opportunity for Indian credits and seem keen to put money to work.On the supply side, Indian issuers see value in tapping the market given that spreads have returned to pre-covid levels. The Jan-March quarter is expected to be a busy period with multiple Indian issuers looking to tap the market.During the year, the US Treasury benchmark yield dropped about 80 basis points to 1.46% Wednesday.

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