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Greece crisis hits India Inc's offshore fund raising plan

By Neelasri Barman & Abhijit Lele
July 14, 2015 08:13 IST
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Bond issuances dipped 31.4% during January-June

A pedestrian walks through empty streets by a mural in Athens, Greece July 12, 2015. Photograph: Yannis Behrankis/Reuters According to issue arrangers in the recent past Adani Port and Power Finance Corporation did road shows but did not go ahead with their issuances while Axis Bank too did investors' meet in Europe but ultimately did not tap the market.

In fact uncertainty over Greece, as well as the rest of the euro zone, has prompted State Bank of India (SBI), the country's largest lender, to delay plans for a $1.5 billion bond offering.

Data from Deutsche Bank shows that for the first six months of 2015 total issuances volume dropped by 31.4 per cent to $6.5 billion compared with $9.5 billion in the same period a year ago.

“Supply from Indian banks is down 50 per cent with only 3 issuances so far. Given large redemption later this year, bank supply is expected to pick up in second half of 2015. Corporate Issuances are also down almost 50 per cent compared to last year. Any relaxation in External Commercial Borrowing (ECB) guidelines on end use or significant pick up in capex cycle can reverse this trend,” said Randhir Singh, managing director and India head – financing at Deutsche Bank.

For the full year 2014 total issuances volume stood at $18.7 billion out of which Deutsche Bank did deals worth $9.8 billion. Data shows that total issuance volumes began to slow down from May 2015 when Indian issuers had raised a meager $200 million compared with $1,624 million the previous month. In June 2015 Indian issuers had raised $1,000 million.

Latest media reports suggest that Euro zone leaders have made Greece surrender much of its sovereignty to outside supervision in return for agreeing to talks on 86 billion euros bailout.

“Moving ahead, we will should see a suitable agreement on Greek debt restructuring. That will help reduce the volatility. US Fed may begin hiking the rates anytime between September-December 2015. Basis these two factors, one may see increased level of market activity in the coming months,” believes Manmohan Singh, managing director and head of debt capital markets - India & South East Asia at RBS.

The situation in India has in fact improved in recent times as compared with what it used to be earlier with factors like inflation, current account deficit being under control, growth picking up and the rupee being stable.

“The view is positive about India now compared with the first half of 2014. As for the months ahead, we are yet to see signs of pick-up in issuances,” said Sanjeev Lall, managing director and head institutional banking group at DBS Bank.

Lall added that signing of deal involving Greece, European Union to address debt concerns will be positive for market due to which many financial institutions and companies who have kept fund raising on hold due to volatility, will back in markets.

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Neelasri Barman & Abhijit Lele in Mumbai
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