Forex debt raising soars, touches $5.6 bn so far this year

MUMBAI: As domestic interest rates are likely to remain elevated for some more time, corporates and banks are hitting the international debt market with renewed interest and have mopped up a hefty $5.6 billion so far this year.
Last year, India Inc raked in as much as $16 billion, up 60 per cent from 2012, through international debt market to meet their working capital needs as well as to retire high cost rupee debts.
Leading the chart this year is State Bank of India, which last Friday sold bonds worth $1.25 billion in a dual tranche issue to international investors. This record sale was preceded by a $1-billion issue by the state-run Oil India, in its debut foreign bond sale last Tuesday.
Investment bankers attribute the rise in forex borrowing to the elevated debt servicing cost in the domestic market and skimpy margins due to the lingering economic slowdown, which has entered the third year now. And going by the large dollar mop-up this year so far, merchant bankers are of the view that 2104 may better the 2013 record.
As per investment bankers, close to $6 billion bond sales are in the pipeline before July from a clutch of big corporates like Bharti Airtel which is planning to raise $2 billion before July, OVL, IFCL etc.
Other issuers include Power Finance Corporation which is planning up to $700 million issue, Rural Electrification Corporation which is tapping a $1-billion issue, and IFCL which is eyeing close to $1.5 billion in forex bond sale.
ONGC Videsh is also planning a benchmark issue shortly to raise $500-700 million to fund its Mozambique oil and gas block acquisition. According to the company, the proceeds will be used to pre-pay a bridge loan of $2.2 billion it had raised earlier this year for the Mozambique oil blocks. “Earlier recharge of Rs 38 brought down STD call rates to 40 paisa per minute but now customers will have to pay Rs 48 for same. Now Rs 38 recharge will reduce STD call rates to 45 paisa per minute,” the retailer said. Airtel said: “There is no change in headline tariffs. Reduction of discounts and promotional offers is a part of our ongoing strategy.”
Vodafone India spokesperson also made similar remark.
“There is absolutely no change in the base tariffs. Promotion packs change from time to time for segment periodically as part of continuously refreshing. Airtel dominates Indian mobile phone services market with over 22 per cent share. It has over 20 crore subscribers.
In the last couple of years, mobile companies have increased their services rates in about a fortnight or month after change in rates of their competitors.
The trio — Airtel, Vodafone and Idea — jointly cover more than half of the Indian mobile market. —PTI