Indian Banks Lured by 14-Year Low Yields Binge on Bonds
Rupee bond sales by Indian banks are off to the best start in five years.
(Bloomberg) -- Rupee bond sales by Indian banks are off to the best start in five years as the lenders lured by record-low borrowing costs seek funds to bolster loans and capital buffers.
The banks have issued a total of 93 billion rupees ($1.3 billion) of local-currency notes since Jan. 1, according to Bloomberg-compiled data. That’s the highest amount at the start of a year since 2015 when they sold a record amount of bonds to meet Basel III requirements.
The nation’s prolonged credit crisis has investors, who are looking for alternatives to notes from loosely-regulated shadow lenders and riskier local companies, lapping up bank’s debt even as yields on it drop to lowest in at least 14 years. Falling borrowing costs and the spike in bond sales come as a relief to banks that are looking to strengthen their balance sheets and boost credit growth, according to rater ICRA Ltd.
On Monday, ICICI Bank sold 9.45 billion rupees of 10-year bonds, according to a person familiar with the matter.
“Surge in issuance by banks is partly fueled by comparatively low interest rates and reasonable liquidity in India compared to yesteryears,” said Kamal Mahajan, head of treasury and global markets at Bank of Baroda. The record sales will help lenders meet their “need for capital and asset-liability management for long-term assets.”
To contact the reporters on this story: Anurag Joshi in Mumbai at ajoshi53@bloomberg.net;Rahul Satija in Mumbai at rsatija1@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Anto Antony, Ken McCallum
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