Volatility in the US bond market consequent to the US Federal Reserve’s decision to raise interest rates more aggressively this year to control inflation has led several Indian firms to shelve their plans on global bond issuances of about $3 billion, a move that could impact investor appetite for bonds in the short term, The Economic Times reported.
Mumbai International Airport Limited (MIAL), Jindal Steel and Power Limited, Vedanta Resources and Sukhbir Agro Energy that were at various stages of progress for their dollar bond issues, have put their plans on hold, the business daily reported quoting unnamed sources.
Jindal Steel and Power Limited and Sukhbir Agro Energy were working on issuing $500 million each with investment banks and law firms like Khaitan and Co and Cyril Amarchand Mangaldas, but have now put their plans on the backburner.
Vedanta Resources was planning a $1-billion bond issue and had appointed investment banks to begin the process when the Fed announced its intent to raise interest rates by March. Vedanta has put its plans on hold for now, the report added quoting sources.
Similarly, Adani group-led MIAL was set to launch their $1-billion overseas bonds issue last week and had appointed Barclays, Deutsche Bank, Standard Chartered and JP Morgan to manage the process. It has put brakes on the plans for now.
The hawkish US Fed stance led to volatility in the macroeconomic environment, resulting in weakness in the global credit markets, Love Sharma of Lombard Odier Investment Managers told ET.
“Yields on Indian credits accordingly have moved higher by about 50-70 bps (basis points)," Sharma said.
Within a two-week period, the yields on the 10-year US treasury have witnessed a 15-bps hike. This has led to increased volatility and ballooning yields for Indian borrowers, a banker said.
However, experts said as money flows to emerging markets are likely to continue, impact of the Fed move on the issuers will be short-lived.
In 2018, India Inc had put on hold corporate bond issues worth over $3 billion to keep an eye on interest rates in the US, Mint had reported. JSW Steel Ltd, Birla Carbon, Axis Bank Ltd, L&T Finance Holdings Ltd and Atria Power Corp. Ltd had put their plans on hold.
(Edited by : Thomas Abraham)
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