Firms aim to raise US$2b in US bonds
Following recent government-approved ventures into overseas bond markets, Indian corporations are looking to the United States as a source of much-needed investment funds.
With the aim of raising about US$2 billion, Indian firms are attracted to the US by the lower borrowing costs than those available in the domestic market.
The successful overseas issues by Reliance Industries and Tata Engineering & Locomotive Company (Telco) has paved the way for public-sector majors, Hindustan Petroleum and the Steel Authority of India to look to issue bonds in the US over a minimum 10-year period.
Similarly, Hindalco Industries, flagship company of the Aditya Birla Group, and engineering giant Larsen & Toubro, are venturing into the Yankee bond market.
Two major financial institutions - the Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India - will join these blue-chip companies in the race for US funds within the next two months.
Roadshows for the $150 million ICICI issue have started, and indications are that the issue may be priced at 150 basis points above 10-year US Treasury bills.
This would be similar to Telco's issue, whose $200 million issue was priced at 168 basis points above US Treasury bills.
'Next in line are the Tata Electric Companies and Power Finance Corporation, who between them, will raise about $425 million,' said a prominent international fund manager.
