India borrowers heading offshore as rupee weakens

Indian borrowers expected to turn to offshore markets as rupee hits new lows.
The weak rupee is leading Indian borrowers to consider dollar funding
The weak rupee is leading Indian borrowers to consider dollar funding

Bankers are expecting Indian borrowers to show more interest in dollar bonds as onshore liquidity deteriorates, though such deals could be hard to sell given the macro conditions in India.

The government faces a growing budget deficit and the rupee continues to weaken, which has prompted the central bank to tighten liquidity by raising the lending rate to commercial banks by 200bp to 10.25%. This domestic liquidity squeeze is making offshore rates seem more attractive, encouraging a number of Indian borrowers to consider the dollar market.

Among the potential borrowers that recently held roadshows are LT Finance and IDFC. A number of public sector companies...

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