Indian firms line up $3 billion of debt issues ahead of RBI decision
About 290 billion rupees of rupee debt sales are lined up over the next few days before the Reserve Bank of India's Oct. 7 policy decision. The article says issuers are trying to lock in borrowing costs amid expectations of a rate hike.
By Khushi Malhotra and Dharamraj Dhutia MUMBAI, Sept 28 (Reuters) — Indian companies are rushing to lock in borrowing costs ahead of a potential rate hike by the central bank, with about $3 billion of rupee debt issuances lined up over the next few days. 02 billion) of short- to long-duration bond sales ahead of the central bank's October 7 monetary policy decision.
Some ofthe prominent corporate borrowers issuing debt include Reliance Industries, Vedanta, Delhi International Airport, Adani Airport Holdings and JSW Energy, seeking an aggregate 185 billion rupees, while infrastructure-related firms Cube Highways Trust, Interise Trust and India Infradebt are eyeing 60 billion rupees. "Issuers who have a view that rupee interest rates will go even higher are locking in rates," said Akshay Naik, India head of debt capital markets at Citibank. " Likely Rate Hike A large majority of market participants expect the Reserve Bank of India to raise interest rates, with further liquidity-draining measures on the cards.
If they're right, it would mark the RBI's first rate hike since February 2023. "With the October policy approaching, there is some uncertainty around the direction of interest rates and liquidity conditions," said Harish Reddy, co-founder, Stable Money, a fixed income investment platform. The policy decision has as its backdrop signs of broadening inflation in India and hikes by major central banks globally, including by the US Federal Reserve. Expectations for RBI policy have shifted over the past month amid a pickup in inflation and stubbornly higher oil prices, bringing prospects of an October rate hike into focus.
Several foreign banks, including Citi and Deutsche Bank, have brought forward their rate-hike calls from December to October, while market pricing reflects a higher likelihood of a longer tightening cycle. While a rate hike hanging over the market's head is pushing up corporate issuance, there is also "a lot of liquidity in the (banking) system to absorb this supply," said Ankit Gupta, founder and MD, Digifinn, an online bond trading platform. com;)