First it was syndicated loans that marked a turnaround in perception toward corporate India, followed by bonds and then equity-linked sector liberalisation heralded the charge in convertible bond issuance. It was just over two years ago that the international commercial banking community became aware of the value in lending to Indian banks and corporates. Credit spreads and loan pricing were collapsing throughout Asia and so India’s positive ratings outlook – if sub-investment grade – and a rela

Indian loan volumes are setting new records each year and the Reliance Group has played its part in this trend. Reliance companies accounted for US$1.4bn of the total US$6bn raised from the loan markets by Indian credits during the first seven months of 2005 and with another US$1bn-plus in loans for Reliance entities still in the market in August Reliance is by far the most active borrower from India this year. To put those figures into perspective, Reliance borrowings – including the deals stil

The deals pay a fixed coupon plus the spread between five-year and one-year Indian government securities (Gsecs) and are effectively ways for investors to bet on a steepening of the curve. The first such deals came in mid-August via HSBC, in the form of a Rs3bn (US$68.5m) four-year from HDFC and a Rs2.5bn five-year from IDBI. The deals pay fixed coupons (5.62% for the former and 5.70% for the latter) plus the spread between five-year and one-year Gsecs – 100bp–102bp at the end of August. That sp

In the 20 months since India’s equity-linked market was liberalised, the quality of the country’s CB issuers has deteriorated steadily. In the first days of deal making, issuance was dominated by a who’s who of corporate India. Six Tata companies have used CBs alongside blue chips such as Reliance Energy, Bharti Tele-Ventures and Mahindra & Mahindra. However, the quality of India’s more recent issuers has been heading downward, a fact best observed in issuers’ declining market caps. In 2004, the

Indian borrowers have been flocking to the loan markets in hordes ever since offshore borrowing took off in a meaningful way in early 2003, and this year has been the busiest ever. By the first week of August, Indian loan volume was about to cross the US$6bn mark for the year. Despite the seemingly never-ending supply of Indian loans, pricing compression has not eased and is grinding in tighter on each new deal that comes to the market, with recent bank deals providing stark evidence of the tren

Derivative trading is not new to India. There is a well-functioning derivatives market that resides on recognised exchanges and is regulated by the Securities and Exchange Board of India (SEBI), which also regulates the capital markets industry. SEBI's remit, however, does not cover OTC transactions, which leaves these deals somewhat in limbo. Because they do not conform to the recognised definition of a derivative as being exchange traded, the instrument is at the mercy of laws and regulations

The numbers speak for themselves. According to Thomson Financial’s figures, in 2003 the Indian securitisation market totalled US$418m from 22 deals. In 2004 it was US$1.32bn from 29 and so far this year the market has seen issuance of US$1.27bn from 21 deals. Not only is the market growing enormously, the size of each deal is increasing significantly too – the largest deal in 2003 was US$56m; in 2005 the biggest has been US$345m. The breakthrough deal came in October 2003 when ICICI privately pl

Issuance volumes in India’s domestic bond market have been rising steadily, but its growth has been restrained over the last couple of years by a growing array of alternative funding options for Indian issuers. Up to August 8 2005, Indian rupee bond issuance volumes totalled the equivalent of US$8.8bn, and although the primary bond market could match the levels attained in 2004, surpassing them will be difficult. Thanks to increased offshore interest for Indian credits, Indian borrowers now poss

Japan more than doubled its share of global output between 1954 and 1974. China performed a similar trick, from a higher base, between 1981 and 2001. Our projections indicate that India will rapidly increase its share of world production from below 6% in 2000 to above 9% in 2020. That suggests to us that India can no longer be ignored in the formation of long-run views on the global economy. Central to the argument is a growth accounting exercise that projects a future potential growth rate for