News: India Inc still bets on foreign money
(TNN 03/06/2006) Mumbai - The markets may be sliding, but Indian corporates of all hues continue to tap the overseas loan markets. In the next couple of months, around $4bn of foreign borrowing is being raised by large and mid-sized corporates.
Despite the weakening of the rupee and the rise in interest rates overseas, corporates are finding it cheaper to raise money abroad.
Top tier or AAA corporates raising money from the overseas market are able to raise funds at around 7.75%, which includes a hedging cost of around 1% and a withholding tax.
These corporates would have to pay around 8.5% in the local markets to raise five-year money. Other than capital expenditure, they also want to acquire financing through this route. Overseas loans is growing even as domestic credit has slowed down in the last one month.
Those looking overseas include Reliance Energy ($500m), Dr Reddy’s ($400m) and Iffco ($250m). Mid-corporates such as Wockhardt ($250m), Dishman Pharma ($60m), Renuka Sugar ($40m) and a host of others are also looking at raising finances. Refinancing transactions include those from Genpact ($250m) and Sterlite ($90m).
Compared to last year, the level of refinancing has come down this year. Incidentally, a host of smaller corporates are also raising money through this route. “While interest rates are rising internationally, the ECB market still remains attractive because of the relatively low hedge cost and favourable availability.
The local credit markets are not conducive for private sector banks at this juncture,” says Monish Tahilramani, head (global markets), HSBC India. Adds Atul Sodhi, head (corporate banking), Calyon, India: “The margins for banks that were shrinking have now stabilised.
Mid-tier corporates also access the ECB market for deals of smaller sizes. Reliance Energy is looking at raising money for its Dadra project. Around 12 banks have been mandated for this issue including Citi, Calyon, DBS, HSBC, StanChart, RBZ and others. The issue is likely to be priced at around London interbank offered rate (Libor) plus 65 basis points. The six-month Libor is currently at around 5.38%.
Dr Reddy’s is in the process of raising around $400m. It is raising a part of this money on the Betapharm balance sheet, which it had acquired early this year and the remaining on its own balance sheet. Even Wockhardt is currently in the market for a $250-m acquisition financing.
It is likely to be priced at around Libor-plus 125 bps. RPL’s $1.5-bn syndication, which was announced earlier, will hit the market in the next few weeks. The loan may be in a mix of seven-year ($950m) and 10-year ($550m) tranches.
After the completion of the project, there would be a step up in the rates.
The all-in-cost for the company is at around 130 bps above Libor. Iffco is looking at raising $250m at around Libor-plus 100 bps. Calyon and ICICI Bank have been mandated for the issue. Genpact wants to refinance a $250-m loan.
Bank of America has been mandated for the issue which may be priced at around 70 bps above Libor. A host of public sector banks like Union Bank of India, Bank of India, Canara Bank are also looking at raising money for the one-to-three year period.
Despite the weakening of the rupee and the rise in interest rates overseas, corporates are finding it cheaper to raise money abroad.
Top tier or AAA corporates raising money from the overseas market are able to raise funds at around 7.75%, which includes a hedging cost of around 1% and a withholding tax.
These corporates would have to pay around 8.5% in the local markets to raise five-year money. Other than capital expenditure, they also want to acquire financing through this route. Overseas loans is growing even as domestic credit has slowed down in the last one month.
Those looking overseas include Reliance Energy ($500m), Dr Reddy’s ($400m) and Iffco ($250m). Mid-corporates such as Wockhardt ($250m), Dishman Pharma ($60m), Renuka Sugar ($40m) and a host of others are also looking at raising finances. Refinancing transactions include those from Genpact ($250m) and Sterlite ($90m).
Compared to last year, the level of refinancing has come down this year. Incidentally, a host of smaller corporates are also raising money through this route. “While interest rates are rising internationally, the ECB market still remains attractive because of the relatively low hedge cost and favourable availability.
The local credit markets are not conducive for private sector banks at this juncture,” says Monish Tahilramani, head (global markets), HSBC India. Adds Atul Sodhi, head (corporate banking), Calyon, India: “The margins for banks that were shrinking have now stabilised.
Mid-tier corporates also access the ECB market for deals of smaller sizes. Reliance Energy is looking at raising money for its Dadra project. Around 12 banks have been mandated for this issue including Citi, Calyon, DBS, HSBC, StanChart, RBZ and others. The issue is likely to be priced at around London interbank offered rate (Libor) plus 65 basis points. The six-month Libor is currently at around 5.38%.
Dr Reddy’s is in the process of raising around $400m. It is raising a part of this money on the Betapharm balance sheet, which it had acquired early this year and the remaining on its own balance sheet. Even Wockhardt is currently in the market for a $250-m acquisition financing.
It is likely to be priced at around Libor-plus 125 bps. RPL’s $1.5-bn syndication, which was announced earlier, will hit the market in the next few weeks. The loan may be in a mix of seven-year ($950m) and 10-year ($550m) tranches.
After the completion of the project, there would be a step up in the rates.
The all-in-cost for the company is at around 130 bps above Libor. Iffco is looking at raising $250m at around Libor-plus 100 bps. Calyon and ICICI Bank have been mandated for the issue. Genpact wants to refinance a $250-m loan.
Bank of America has been mandated for the issue which may be priced at around 70 bps above Libor. A host of public sector banks like Union Bank of India, Bank of India, Canara Bank are also looking at raising money for the one-to-three year period.
posted by InCar Group Press Room at 13:15
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