Is it true the Indian companies like Reliance and SBI have raised record bonds in January 2022?

The first two weeks of January 2022 were a record of sorts for Indian corporates raising bonds in the global offshore market. For instance, Indian companies raised a record $6 billion via bonds in the offshore market in just 15 days. In a way, this is not only a signal that foreign investors are happy with the improving credit profile of Indian companies, but they are also happy with the stability of the rupee, which is a key to dollar returns.

It is not just about the amounts but also about costs. In fact, companies that raised bonds in the global market in Jan-22, ended up paying coupons that were 30-35% lower than normal levels. This helped cut down sharply on their funding costs. Some of the Indian companies borrowing aggressively in the offshore bond market, apart from RIL and SBI, included JSW Infrastructure, Shriram Transport Finance Ltd and India Clean Energy.

In a way, the neutral approach to Chinese paper also gave a boost to the demand for Indian paper. Even as India has faced the Omicron challenge, global investors are wary of Chinese paper after the COVID pandemic as well as the recent Evergrande crisis which raised questions over the way the real estate business in China was being managed, India ended being a beneficiary on both counts.

Why is this bond number stunning? The offshore bonds worth $6.03 billion raised in the first 15 days of January 2022 were nearly 3 times the amount of money raised via bonds in the previous year. Two domestic triggers worked in favour. Firstly, the rupee has strengthened from around 76/$ to around 74.60/$ in the last few weeks. More importantly, the CRISIL ratio of credit upgrades in India has also been on the rise in the year.

Now for the specifics. Out of the Indian companies that raised $6.03 billion in the fortnight, nearly two-third of the funding to the tune of nearly $3.96 billion was accounted for by Reliance Industries. The other fund raising deals included IRFC $500 million, Shriram Transport $475 million, India Clean Energy $400 million, JSW infrastructure $400 million and SBI London $300 million. All these happened at spreads that were 30-35 bps better.

For the Indian corporates, the timing was also extremely ripe. High quality borrowers have managed to raise funds at short notice and that too at extremely attractive rates. This fund raising was also timed to lock in money before the rate hike sequence starts from March onwards. Most institutional investors have also been betting on a revival in Indian growth and the top notch Indian companies fit into that story quite well.