The rush to raise funds overseas is once more visible among Indian corporates. Led by banks and financial institutions Indian issuers have raised close to $4 billion since July, 2012. Deutsche Bank has managed seven out of the 14 deals this calendar year. In an interview with Somasroy Chakraborty, Sunil Agarwal, head of institutional client group at Deutsche Bank in India, shares his views on the emerging trends in overseas bond issuances this year. Edited excerpts:
Q. How much money has been raised so far this calendar year through overseas bond issuances?
A: I think fair bit of issuances have happened in the last 45 days. Indian issuers have raised over $6.50 billion through G3 issuances this calendar year. The general theme is that there is good liquidity out there and global investors are also exploring avenues that offer them good returns on their investments. This is primarily driving overseas bond issuances. From Indian issuers' point of view these issuances will help them support their offshore growth needs and aid them in managing their cash flows better.
Q. How is the deal pipeline?
A: The pipeline is still good. There are a couple of issuers looking to approach the market at the right time. So, you will probably see a few more issuances in the months of October and November. Ultimately, as I said, it will depend on the pricing. If they find the price attractive they will hit the market.
Q. Will Indian corporates raise more funds this year through this route compared to last year?
A: The total issuance in 2009 was about $2 billion, in 2010 it was around $8.5 billion and in 2011 the figure was $9 billion. It is difficult to predict but I see no reason why we cannot top $9 billion this year.
Q. Why there is a renewed interest among Indian companies to raise funds abroad now since most of them have put their expansion plans on hold?
A: I will not say that there is a renewed interest among Indian issuers to raise funds overseas. They have always been for the past two/three years looking for opportunities to tap this route. They probably waited for the right pricing. Since the pricing is suiting them now they are going ahead with the issuances. Since State Bank of India (SBI) came out with its issue in July, 2012 Indian issuers (Banks and financial institutions) have raised around $4 billion.
Q. Are you seeing any new trends this year?
A: I see a clear trend of Indian issuers exploring niche markets. As long as the final cost in US Dollar is within their expectations, we have witnessed issuers tapping new markets like CNH (Chinese Renminbi), SGD (Singapore Dollar). As a result ticket sizes in many of the transactions this calendar year have not been large. Indian issuers are becoming savvier in their fund raising. If they find the right price they are not hesitant to raise funds in currencies like Singapore dollar and Chinese renminbi. Also, the size is no longer an issue. They are willing to visit the market more than once if the investors' appetite is there. This achieves the twin targets of pricing and diversification of source of funding.
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