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State Firms Eye $1.9B Bond Sale Amid Rising Borrowing Costs
11 Feb
Summary
- Indian state-run firms plan a $1.93 billion bond issuance this week.
- Companies are raising funds before fiscal year-end interest rates rise.
- Bond sales success hinges on firms accepting lower prices due to yields.
Indian state-run enterprises are preparing to issue bonds totaling 175 billion rupees ($1.93 billion) within the current week. This proactive approach is driven by the expectation that borrowing costs will continue to escalate as the fiscal year draws to a close.
Several prominent state-owned entities, including National Bank for Financing Infrastructure and Development (NaBFID), Housing and Urban Development Corp (HUDCO), Small Industries Development Bank of India (SIDBI), and Power Finance Corp, are slated to launch their bond offerings. These companies aim to secure funding despite higher interest rates.
Industry experts suggest that the market's reception of these bond sales will largely depend on the pricing acceptable to the issuing firms. Recent market trends indicate that corporate bonds have seen a decline in value, making fundraising more expensive for businesses and potentially impacting their profit margins.
This issuance strategy reflects a shift in corporate planning, with companies now opting to access the market rather than waiting for a potential decrease in yields. This decision acknowledges the likelihood of elevated borrowing costs persisting in the short term. Investors may demand higher yields due to stable interest rates and rising inflation expectations.
