Waiting for a boost

Worse still, India’s efforts to boost its reputation as a business destination are under threat. Corruption scandals are undermining confidence among foreign investors, while domestic entrepreneurs complain that overregulation is harming their prospects. Inflation, too, has yet to be brought fully under control. Even after years of fund inflows, inadequate infrastructure remains a problem. Countless infrastructure projects are under way, but only the country’s domestic lenders are able to carry the financing burden, leaving the banking system...

It is July in Mumbai and the mercury is well into the 90s, as is the humidity. It is early in the monsoon season in India’s financial capital and everything is coated with a light sheen of moisture. Sanjiv, the manager of one of the city’s leading textile stores, mops his brow and shakes his head wearily. “We just finished one inspection [income tax, as it turns out] and already we have another [fire safety] starting tomorrow. It just never ends.” Sanjiv is not the type to curse, which is just as well. Already this year, he has been inspected...

While India’s ability to continue its rapid growth trajectory is giving investors and economists pause for thought, banks – both foreign and domestic – seem to be unswervingly sure of the potential of the country’s investment banking market. Elsewhere in the world, banks may be scaling back their operations and cutting staff counts, but, in India, they are boosting resources. Credit Suisse is expanding its equities, fixed-income and investment banking teams. At end-August, it announced 11 fresh appointments to these groups. The Swiss bank...

Indian borrowers have long had a reputation for being a price-sensitive lot. This was borne out in Indian Oil Corp’s US$500m 10-year bond in late July. BNP Paribas, Citigroup and RBS were the three banks that handled the deal and one of them bid just US$1 in fees for the privilege of doing so. There is little doubt that it was simply a league table, trophy trade. In fact, this was not the first time IOC’s offshore bond was completed on such low fees. Back in January 2010, IOC’s debut offering was the harbinger of fee compression on Indian G3...

The Indian debt markets have demonstrated consistent growth in the last few years, with the government introducing various measures to increase the depth of the market. Industry participants believe the corporate bond segment has reached a turning point and is poised – with a push in the right direction – for rapid expansion. This optimism stems from various measures in the last couple of years to stimulate the domestic fixed-income market and reduce the burden on the country’s overstretched banks. Although there has been progress, the Indian...

India’s power sector is beginning to feel the heat, or maybe the lack of it, as lending has slowed of late. The sector has always been the biggest component of loan portfolios. This has been evident over the years, especially in the last three to four, when it has grown exponentially higher with state-owned utilities and private sector developers rushing to build power plants to meet increased demand due to rapid economic growth. In 2010, the power sector registered loans of US$25.4bn, up from US$15.05bn in 2009 and US$8.9bn in 2008,...

Many Indian acquirers seeking US dollar borrowings – mostly for overseas assets – have hit the market in the last 18 months and there are no signs that such activity is slowing. A significant driver of growth in offshore loans will continue to be resources- and commodities-related acquisitions, likely in either Australia or Indonesia, said B Krishna Iyer, head of ICICI Bank’s international syndications group, at the Asia Pacific Loan Market Association annual conference in June. Indian companies had “huge resource requirements” and were...

Over Rs315bn (US$6.8bn) of foreign currency convertible bonds are set to mature by March 2013, piling pressure on India’s corporate issuers. Equity-linked bankers, however, are not expecting huge defaults, but are instead readying themselves for restructurings, refinancings and even some decently sized primary deals. Behind that sense of optimism is the enduring appetite investors have shown in Indian structured deals, despite global market volatility. Although some small- and mid-cap companies may struggle to meet redemptions, most of the...

Every developing country has an epiphany in its history when it gets accepted as a member of the global elite. China’s moment came when it joined the World Trade Organization in 2001, while Brazil’s came when it was chosen to host both the summer Olympics and the football World Cup between now and 2016. India’s moment of clarity was the result of three activities in which the South Asian nation excels – entrepreneurship, bureaucracy, and cricket. When the three combined in September 2007 to create the Indian Premier League, the cricketing world...