India Inc on an overseas borrowing binge

Indian corporates are on a borrowing spree overseas. Just two weeks into the current calendar year, India Inc has raised over $6 billion through offshore bond issuance, aided by surplus liquidity, low interest rates and the growing traction for ‘environmental, social and corporate governance’ or ESG bond issues in global markets.

On January 4, Reliance Industries announced a fundraise of $4 billion through a multi-tranche long-tenure dollar jumbo bond issuance. The largest ever foreign currency bond issue from India, it was in three tranches of $1.5 billion, $1.75 billion and $750 million spread over a tenure of 10, 30 and 40 years, respectively.

Besides RIL, several more Indian corporates issued offshore bonds, especially ESG-labelled green and sustainability bonds.

On January 7, Nasdaq-listed ReNew Energy Global Plc raised $400 million by issuing certified green bonds through its Mauritius-based subsidiary India Clean Energy Holdings.

Indian Railway Finance Corporation (IRFC), the market borrowing arm of Indian Railways, launched its $500-million dollar bonds under the $7-billion ‘global medium-term note’ (GMTN) programme rated at par with the sovereign. IRFC was the first central public sector enterprise (CPSE) to exclusively list its green offshore bonds at Indian stock exchanges INX and NSE-IFSC at Gift City in Gujarat.

“Availability of funds at lower costs is the only reason so many corporates are borrowing from the international markets. Some of these issues are also ESG-based because that particular market is more vibrant overseas, as compared to India, so you get fine rates of borrowing,” said Madan Sabnavis, Chief Economist at Bank of Baroda.

Last week, JSW Infrastructure raised $400 million through sustainability-linked bond issue for a seven-year tenure. The fund raise marked the company’s debut bond issue as well as the first sustainability-linked bond (SLB) from an Indian ports company. Prior to that, Shriram Transport Finance Company raised $475 million through social bonds overseas.

A recent report by S&P Global Market Intelligence said India’s green bond issuance is set for a new record in 2022, following an exceptionally strong 2021. According to the UK-based green bond tracking agency Climate Bonds Initiative, India issued $6.11 billion in green bonds during 2021 — the most since 2015, when green bonds were first issued from the country.

The first two weeks of the current calendar year also saw the country's largest lender, State Bank of India, raising $300 million through its London branch, while Adani Enterprises subsidiary Mumbai International Airport Limited received board approval to raise upto $1.25 billion in one or more tranches through issuance of dollar-denominated secured fixed rate bonds.