The Hindu Business Line : India Inc raises Rs 52,455 cr from overseas issues in '06

Advertisement

New Delhi Jan. 28 India Inc's appetite for raising capital abroad shows no sign of waning; a record Rs 52,455 crore was raised through overseas issues during 2006.

Overseas debt instruments have found favour with Indian companies, with over Rs 43,600 crore being leveraged through plain bonds and convertible bonds.

Recourse to equity has been comparatively lukewarm, accounting for only around 17 per cent of the total capital raised, a contrasting trend in comparison to previous years, according to data of initial offerings during 2006 compiled by Prime Database.

In all, there were 113 initial issues, including 35 equity issues that raised Rs 8,845 crore; there was an overwhelming majority of debt issues at 78 FCCB and plain bond issues.

Prior to 2006, the record for the highest amount raised overseas was Rs 35,525 crore through 101 issues in 2005, of which 40 per cent was accounted for by equity issues (Rs 14,208 crore through 61 issues).

Major companies that raised funds abroad last year were Reliance Communication, 3i Infotech, Ranbaxy, Jubilant Organosys, M&M, India Cements and L&T.

According to market analysts, the rush for FCCB issues was driven clearly in the light of cheaper funds abroad and the trend is likely to gain momentum during the current calendar.

3i Infotech's FCCB offering of 15 million euros in October 2006 (convertible over a four-and-a-half-year period) had a yield-to-maturity of 5.8 per cent. (It is the premium to be paid at redemption if the bonds are not converted into equity.)

Reliance Communication's $500-million FCCB issue, with a maturity period of five years, had a yield to maturity of 4.65 per cent.

M&M five-year FCCB issue of $200 million in April 2006 had a yield-to-maturity of five per cent, while Ranbaxy's $400-million February 2006 FCCB issue, again with a five-year tenor, had a yield-to-maturity of 4.8 per cent, much cheaper than the rates at which debt can be leveraged in the domestic markets.

In comparison, blue-chip PSUs that borrowed from the domestic market were offering a much higher 8.5-9 per cent for 10-year maturity, while banks were offering 8-8.5 per cent for one-year bulk deposits.

More Stories on : Corporate | Overseas Borrowings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
RCOM tower biz demerger cleared

AI team to finalise $6-b US Exim loan

India Inc raises Rs 52,455 cr from overseas issues in '06

8% growth sustainable: Economists

Investors can dabble with variety of schemes

Petro products: Govt undecided on Myanmar, Bangla Re payment terms

Recruitment of foreign seafarers runs into rough weather

Dollar to determine gold direction

Panel may suggest lower foreign equity threshold for microfinance NBFCs

Action hinges on Tata Steel-Corus deal, RBI meet

And now, retail media wars