We wrote in our last special report on India a year ago that regulatory reform would be the key to holding on to the development the country’s capital markets have enjoyed over the past few years. Reform did indeed come, albeit at a frustratingly slow pace and in patches when a blanket rejig to bring India’s capital markets up to international developed-country standard was called for. Examples of impressive developments were the new Reserve Bank of India guidelines on offshore hybrid issuance w

In July 2004, when the Export-Import Bank of India issued its well-received initial US$250m five-year Reg S bond with a 5.375% coupon, it paved the way not just for the bank itself, but also for other Indian issuers by changing sentiment towards them in the Reg S market. Then, in February 2006, Exim Bank took an even bigger step when it decided to borrow in the yen market. No other Indian entity had tapped the Japanese market since 1991. “We wanted to diversify our investor base,” says N Shankar

Taking advantage of an easing in governmental regulations as to what constitutes Tier 1 capital for banks, ICICI Bank last month became the country’s first issuer of hybrid Tier One debt on the international capital markets. The bank’s US$340m non-call-10 perpetual deal, led by JP Morgan, Merrill Lynch and Morgan Stanley, was received with gusto by a broad range of investors, said Bhargav Dasgupta, ICICI Bank’s Mumbai-based head of international banking. The issue was hugely oversubscribed and p

As in any other developing country, privatisation of state assets in India is fraught with many hurdles, such as opposition from labour unions, anti-foreigner sentiment and issues of national security. But in India, it also assumes an added dimension because the government is made up of a coalition of parties with differing political and economic ideologies. This was in evidence in early July when Communist parties and their allies plus the labour unions threatened to withdraw support and call n

Issuance volumes in India’s securitisation market dipped after the Reserve Bank of India (RBI) released new guidelines for the asset class in February. These were intended to create a framework that is in the long-term likely to lead to the formation of a more robust Indian securitisation market. The near-term effect, however, was discouraging. “Issuers are slowly coming in and the situation should get better once the investor base widens if, as expected, there is a parliamentary amendment to ex

A lmost immediately after the Reserve Bank of India (RBI) allowed Indian banks to augment their capital funds by issuing hybrids in foreign currencies, private sector UTI Bank set the ball rolling with a US$150m 15-year non-call 10-year deal. The easing of the rules was with “a view to providing banks in India with additional options for raising capital funds, to meet both the increasing business requirements as well as the Basle II requirements within the existing legal framework,” said the RBI

India’s loan market used to have the reputation of being a sleepy backwater, with only the occasional deal breaking the surface. Now it is one of the prime destinations on any Asian loan banker’s travel itinerary. Offshore loan volumes have reached levels that make it a crucial component of overall bank lending in Asia, and its importance is not likely to diminish any time soon. If 2005 was the busiest year so-far for Indian loan activity, 2006 seems poised to usurp that position. Until the firs

A combination of outdated regulations and lax provisioning rules have kept the ratio of non-performing loans (NPLs) at Indian banks high, often at above 8%. But a number of changes have now led to an improvement. The changes in the legal environment began in 2002 with the introduction of new insolvency laws under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SRFAESI). The law enables creditors to foreclose on assets without first seeking perm

The Indian CB market is entering its third act. In act one, the market took off after the Reserve Bank of India amended its rules on offshore borrowings in January 2004. In act two, issuance shut down in spring 2006 as the Sensex tanked. Now for act three, where all parties commit to sensible transactions that underpin conservative growth expectations. Modesty, humility and moderation become the new watchwords where everyone subordinates their goals to the interests of a well-priced deal that se

The recent opening of UBS’s India Service Centre in the southern city of Hyderabad – the bank’s most significant initiative thus far in the offshoring business – is the latest testament to the importance the financial services industry continues to place upon India. The country has become a source of support to various business functions, in particular investment research, a business that has steadily been gaining steam in the universe of outsourcing solutions. Many other financial firms, such a

The best is yet to come for India, experts believe, because all the major players in the Indian story – the global business and investment community, the Indian private sector, and the Indian government – are apparently committed to building upon the immense progress the country has made since economic liberalisation was first introduced more than a decade ago. Their collaborative efforts over the next few years will give rise to an “India Inc,” that will be a global economic powerhouse that the