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Offshore syndication of loans at 15-yr high, zooms to $21 bn in '23

By Manojit Saha & Anjali Kumari
January 15, 2024 14:20 IST
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Funds raised by India Inc. through offshore loan syndication hit a 15-year high in 2023 with companies and banks raising $21.4 billion, the highest since 2007.


Illustration: Uttam Ghosh/

The momentum is expected to continue in 2024 as well with over $4 billion fund raising expected in the first three months of this year.

Companies raise funds, both onshore and offshore, depending on interest rates and activities. Funds raised offshore can be deployed in overseas activities.


“With India’s macro being positive, we expect this quarter to also be quite busy, with offshore syndicated loan supply for India to potentially exceed $4 billion,” said Chetan Joshi, Head — Debt Financing, HSBC India.

HSBC was the leader in offshore syndicated loan activity in 2023 cornering 16.4 per cent of the fund raised, ahead of Mitsubishi UJF Financial Group (10.65 per cent), and State Bank of India (10.45 per cent), according to data compiled by Bloomberg.

“This [offshore loan syndication] is likely to be concentrated in both BFSI and core manufacturing/ infra sectors, which continue to be the growth drivers for this market,” Joshi said.

2024 started on a strong note with SBI raising $1 billion offshore syndicated loans arranged by HSBC from 16 banks from the Philippines, Taiwan, and South Korea among others. According to sources, Exim Bank is also planning to raise $750 million shortly.

After a subdued 2021, offshore loan syndication picked up in 2022 following the geopolitical tensions in Europe and interest rate hikes by global central banks which made fundraising through bonds difficult.

From a low of $7.3 billion in 2021, the offshore syndicated loans raised by Indian firms rose to $11.1 billion in 2022 and almost doubled to $21.4 billion in 2023.

“Since 2022, there have been two factors.

"One is the rate hike cycle which started in January and then the Russia-Ukraine war broke out in February.

"Both of these had a dramatic impact on debt financing because dollar interest rates and credit risk premiums shot up.

"As a result, bond market volumes [funds raised by Indian issuers] in 2021 were north of $20 billion which dramatically fell to $7.5 billion in 2022.

"In 2023, because global interest rates were continuing to rise, it came down to $5.5 billion,” an official from a foreign lender said.

“At the same time, the syndicated loan market – which is the market where international banks participate in syndicate deals for Indian borrowers – has been doing very well.

"The loan syndication trend has been exactly opposite to the bond market,” the official added.

The total offshore loans raised by Indian companies, including bilateral deals in 2023, was $25 billion – the highest since 2018.

Reliance Industries, Reliance Jio Infocomm, Adani Green Energy, SBI, and HDFC Bank are some of the entities that have raised offshore loans in 2023.

So far as fundraising via bonds is concerned, Indian players are in a wait-and-watch mode though the expectation is that rates which have stabilised now, will start coming down.

“We are still waiting for the proper market feedback,” said Umesh Revankar, executive vice-chairman at Shriram Finance.

“We don’t see the rate softening at least for the next three months," he added.

“In the last two months, the rates have been softening.

"The momentum has started; going forward, people will increase their borrowing from abroad, however, global rates are still elevated,” said V R C Reddy, head of treasury at Karur Vysya Bank.

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Manojit Saha & Anjali Kumari
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