IFR Asia – March 24, 2018

COUNTRY REPORT INDIA

INDIA

DEBT CAPITAL MARKETS

› SHRIRAM ADDS TO 2023 MASALAS

SHRIRAM TRANSPORT FINANCE has signed a
pricing supplement for a Rs1.9bn (US$29m)
tap of its Masala bonds due in June 2023,
according to a BSE release.
The notes will be consolidated with
Rs6.5bn of offshore rupee bonds issued on
March 8. The interest rate is fixed at 8.1%.
The yields on Shriram Transport
Finance’s Masala notes were lower than
those on its comparable domestic bond as
per issuer feedback, according to a Fitch
report dated March 11.
The notes are being issued off a Rs50bn
MTN programme set up through MUFG
Securities.
Fitch and S&P both recently assigned BB+
ratings to the programme.
“Indian non-banking financial
institutions (NBFIs) are likely to become
more active issuers of Masala bonds over
the medium term, reflecting their rising
need for diversified funding to support
growth,” says Fitch in the report.
The larger NBFIs, with strong
reputations, are likely to find Masala
issuance viable, while smaller unrated
issuers are likely to find offshore rupee
bond issuance difficult, according to Fitch.
Pricing remains an obstacle.
“Issuers have, so far, typically faced yields
20bp–50bp higher on Masala bonds than
domestic issuance,” Fitch says.
Rising domestic interest rates will
help narrow the pricing gap if yields on
domestic bonds respond more sensitively
than Masala yields, Fitch says.
The yield on India’s 10-year government
bonds has increased by 100bp since last
July and is expected to go up further as the
Reserve Bank of India raises policy rates,
according to analysts.
NBFIs are expected to compensate
for weak bank lending, which is
likely to be held back due to state
banks’ undercapitalisation, despite the
government’s planned injections.
As a result, NBFIs will require funding
support as banks’ share of funding is
expected to fall, Fitch says.

› RELIANCE JIO SEEKS BOND OKAY

RELIANCE JIO INFOCOMM is seeking board

approval to raise up to Rs200bn from

the sale of non-convertible debentures,

according to a BSE filing.

The board meeting was scheduled for last

Friday.

The telecom company, part of RELIANCE

INDUSTRIES, will raise the funds through a

private placement in one or more tranches.

› ICICI SELLS RS40BN OF AT1S

ICICI BANK has raised Rs40bn from Basel III-

compliant Additional Tier 1 bonds at 9.15%,

according to a source close to the trade.

The notes have a call option at the end of

five years.

Care and Icra have assigned AA+ ratings

to the Indian bank’s AT1 bonds.

ICICI Securities Dealership and the issuer’s

own syndication team were lead arrangers

on the issue.

› BHARTI AIRTEL SELLS DUAL-TRANCHER

BHARTI AIRTEL has raised Rs30bn from dual-

tranche rupee bonds, with Axis Bank as the

arranger, according to a National Securities

Depository filing.

The Indian telecom company raised

Rs15bn from a three-year, one-month and

seven-day tranche at 8.35% and an equal

amount from a two-year, one-month and

seven-day portion at 8.25%.

Crisil assigned a AA+ rating to the

unsecured rupee notes.

The previous week, Bharti Airtel said its

board had approved plans to issue rupee

corporate bonds of up to Rs100bn and

foreign-currency notes of up to US$1bn.

› UBI ANNOUNCES EARLY CALL

UNITED BANK OF INDIA plans an early call

on April 11 on Additional Tier 1 bonds

totalling Rs9.4bn.

The state-owned bank will redeem the

bonds at par, well ahead of call dates in

2020 and 2022.

UBI issued Rs1.5bn of AT1s at 11.95% in

September 2015, Rs2bn of AT1s at 12% in

March 2017, Rs4.9bn of AT1s at 10.95% in

November 2017, and Rs1bn of AT1s at 11%

in December 2017.

Indian public-sector banks are exercising

early calls as per the regulatory event of the

Reserve Bank of India’s placing them under

the Prompt Corrective Action framework

last year. The framework requires lenders

with weak asset quality to conserve capital

and address their bad debts.

Last week, S&P said AT1 instruments

that Indian PSBs had issued were no longer

counted as equity in light of recent events,

and affirmed the issuer credit rating of all

PSBs with stable outlook.

› SIDBI TAPS MARCH 2021 LINE

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

(Sidbi) has tapped its 7.85% March 2021

bonds for Rs25bn at a clean price of

100.2558, according market sources.

ICICI Bank was the sole arranger on the

reopening.

Care has assigned a AAA rating to the

bonds.

Sidbi has yet to make an official

announcement on the price and size of the

tap.

› PFC SCRAPS DUAL-TRANCHER

POWER FINANCE CORP has scrapped a dual-

tranche bond sale after failing to achieve its

desired prices, according to market sources.

PFC received lowest bids of 7.59% for a

one-year seven-month tranche and 7.73%

for a three-year 23-day piece.

It was targeting proceeds of Rs5bn, plus

an undisclosed greenshoe amount, from

each tranche.

Recently, PFC raised Rs27.95bn from one-

year 10-day rupee bonds at 7.53%.

The notes have AAA ratings from Care,

Crisil and Icra.

SYNDICATED LOANS

› IRFC PICKS TRIO FOR YEN LOAN

State-owned INDIAN RAILWAY FINANCE CORP

has picked three banks for its US$250m-

equivalent 10-year loan.

Mizuho Bank, MUFG and SMBC are

mandated lead arrangers and bookrunners

of the yen-denominated loan, which has

a bullet maturity and is expected to be

launched into syndication in the coming

weeks.

The loan has a base size of US$100m

and comes with a greenshoe option of

US$150m. Banks had until March 1 to

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