India’s major dollar corporate bond market is experiencing its longest dry spell in 13 years as repaying foreign debt becomes unprofitable due to a historically low rupee.
According to figures published by Bloomberg, only $6.83 billion have been raised this year, and an Indian company hasn’t sold a US-currency note since April. That represents the lowest number of issuances since 2018 and the longest stretch since 2009 without a deal.
India also must contend with a record number of government securities competing for investors’ money while its rupee hit a record low against the dollar.
“A rapid increase in dollar interest rates that eliminates the arbitrage with borrowing in India may be to blame for the decline in dollar issuances this year, “said Arvind Chari, Quantum Advisors Pvtchief.’s investment officer. “Some fund-raising initiatives may have been delayed due to the rupee’s severe fall.”
This year, several businesses have abandoned agreements. The most valuable steel manufacturer in India, JSW Steel Ltd., announced last month that it would concentrate on raising money from domestic investors this year due to the reduced cost of capital.
India’s shift away from dollar debt is consistent with changes in other Asian countries. The supply of foreign currency has decreased due to the depreciation of the currencies of Thailand, Indonesia, and the Philippines.