India continues to capture the imagination of international investors. The country’s capital markets are developing almost as quickly as its economy, which is growing at a brisk 8.4%. The headline numbers really do tell the story because Indian companies are not just taking on the world, they are taking over the world as well. Indian companies have pursued overseas acquisitions worth US$19.33bn so far this year, a quadrupling of volumes for the same period last year. Indian companies are also proving equally attractive targets for foreign...Read more
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The Indian economic juggernaut rolls on and the country’s economy is almost unrecognisable from the underperformer it was just as little as 10 years ago. There was a time, for example, when insufficient foreign reserve levels were a major issue, which hardly seems plausible now that the country’s foreign reserves stand at a whopping US$200bn and the country has become an important player in the global economy.
On August 15 India completed its 60th anniversary of its independence from colonial rule, marking a roller coaster ride for the country that now occupies centre stage in the world of Asian finance. Today, its corporates are at the crossroads of the global economy, making history with their M&A pursuits and providing the bulk of the opportunities for M&A financiers in Asia despite regulations that are not conducive for such financings.
India’s derivatives market grows from strength to strength each year, but its rate of expansion and maturation is a measured one due to the regulatory hand of the Reserve Bank of India. Excitement is building, however, about the introduction of credit derivatives, the trading of which should begin before 2007 comes to a close.
Indian offshore G3 bond issuance has taken off this year, with volumes so far almost double of what was printed in all of 2006. Bank capital raising to comply with Basel II explains this surge in volumes, however, and there remains a sense that much more issuance should have come from this awakening giant of a country.
Depending on who you talk to, India needs to invest anywhere between US$300bn and US$450bn on infrastructure development over the next five years. And staggering though these amounts are, bankers believe it will not be difficult to finance given the level of interest from the government and private sector.
When the qualified institutions placement (QIP) was introduced to Indian equity markets in May last year, many expected it to spell the demise of the depositary receipt (DR). So far this year, however, a whopping 62% of the US$18.2bn that Indian equity issuers have raised has come from offshore issuance.
India continues to be the motor that drives the regional converts industry. By mid-2007 the country had handily surpassed issuance volumes of 2006, which was a record year. The Indian CB market is also well positioned to shrug off global credit concerns, given that it is an issuer’s equity story rather than its creditworthiness that drives primary volumes. However, the industry will have to battle investor fatigue and a policy bias against mid-cap issuers.
The Indian structured finance market has unintentionally avoided being adversely affected by the global nervousness that the US sub-prime crisis called. Issuance volumes are growing, albeit slowly, and the investor base is showing signs of expanding amid increased enthusiasm among foreign investment banks for Indian structured paper.
With three hugely successful bond deals under its belt so far this year, each one in a different currency, ICICI Bank has firmly established its presence in the international capital markets and, providing the markets remain favourable, is likely to have little problem tapping foreign funding going forward.