Bankers have predicted that the removal of the offshore borrowing regulations is likely to result in an increase in Indian borrowing. This should allow India to build on its impressive performance last year when over $2.8 billion was raised - some $1.2 billion more than in 2002.
While analysts believe the bond market will be the main beneficiary of this move, there is no doubt loan bankers will also be looking to up the ante in 2004. Even before these revelations, there was a buzz around the market with many credits champing at the bit to get in on the action.
Corporation Bank launched a $50 million 364 day deal on January 26. The financing is being arranged by DBS, DZ Bank and Natexis and pays an all-in of 44bp for top tier commitments of $8 million or more.
This transaction comes hot on the heels of the borrower's $50 million debut financing signed on October 21 last year. Arrangers Credit Lyonnais, DZ Bank, Natexis and OCBC priced the deal at an identical 44bp for tickets of $7 million.
Export-Import Bank of India is also looking to tap into the current euphoria surrounding Indian paper with a $75 million facility. This fundraising was launched yesterday by arrangers Bank of Tokyo-Mitsubishi, Citigroup Global Markets, DZ Bank and Natexis.
As with Corporation Bank, this loan was preceded by two other deals - a $55 million financing priced at 42bp and a $75 million transaction at 41bp. The current credit is priced at exactly the same level as the latter at 41bp for contributions of $10 million or more.
This level is astonishing considering the borrower's previous deal from early 2003 slumped alarmingly and was withdrawn. Market observers claim the maturity - at five years - frightened investors off.
The current syndication is unlikely to struggle however as banks are licking their lips in anticipation of booking this asset. Also given the success of the last two fundraisings market talk suggests the $25 million greenshoe option will be exercised, increasing the deal to $100 million.
Canara Bank is also in the midst of securing its second loan in two months with a $50 million facility arranged by Bank of Tokyo-Mitsubishi, Natexis and OCBC. The 364 day deal pays 41bp for $7.5 million tickets, identical to that offered on its November edition.
In addition to these credits that have already been launched into the market, a number of others are sitting in the pipeline. No mandates have been awarded yet, but sources suggest they are imminent. Punjab National Bank is looking to raise as much as $215 million over five years.
Some bankers point to the failure of Exim's earlier deal, but others say the positive sentiment affecting the market, as well as the relaxing of restrictions, has provided the platform for a successful syndication. Still more are also looking at the possibility of refinancing existing facilities.
Industrial Development Bank of India has a number of long term credit lines coming due in the near future and ICICI Bank has a $127.5 million credit maturing in March. While many bankers are delighted with the constant stream of deals emanating out of the sub-continent, others have sounded a word of warning.
One syndicator advises caution to investors purchasing paper as with the restrictions gone, the market will be less regulated. Others dismiss these fears, pointing out that the ceiling on short-term foreign debt has only been increased by 50bp to 200bp over US treasuries. This leave most of the borrowing in the hands of the top tier credits as they are the only ones who can command pricing below these levels.
