According to the data compiled by Prime databases, companies and banks raised Rs 45,237.15 crore so far this year, as compared to Rs 77,845 crore amount raised in the similar period last year.
"A higher US interest rates especially in the shorter end of the curve coincided with weakening
Due to this, most companies are opting for domestic market for fund raising.
For instance, recently NTPC has raised 10 year onshore rupee bond at an aggressive rate of 7.44 per cent annualised and
Foreign fund raising has now not remained cheap after the
For instance, the US Fed hiked interest rates by 75 basis points for the second straight month in July. With this, they have cumulatively hiked 150 basis points in last two months due to rising inflation.
Due to this, the yields on
There is also a currency risk to the issuers as rupee has depreciated to the record low before appreciating due to various international cues.
Meanwhile, ECB borrowings figures too suffered a major setback as per April month data.
However, a major chunk of ECBs is coming up for renewal for corporates which may push corporates to refinance their existing borrowings both in offshore especially for those issuers who have natural hedge and some in onshore markets.
According to the ICRA, overseas issuances are doubtful in FY2023 due to elevated borrowing costs following a rapid increase in foreign currency benchmark rates, as well as tighter liquidity conditions globally.
While private bank issued AT-I in overseas market during FY2022, totalling Rs 128 billion, domestic AT-I issuances picked up steam once the Centre's permission came for most banks in H2 FY2022, as public banks require prior government approval before issuing AT-I bonds.
The issuances totalled Rs 300 billion, with demand coming from corporate treasuries, family offices, and high-net-worth individuals, as well as some private banks.
Going ahead market participants expect companies and banks to raise funds through domestic corporate bond market because both onshore and offshore both borrowing cost has risen.
"we expect more and more corporate bond issuers to tap the domestic rupee bond market as both onshore and offshore borrowing costs are elevated,"
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