Offshore bond market: Indian firms spanning renewable energy to financial sectors are set to leverage the high-yield offshore bond market, capitalising on rising investor interest amid a decline in offerings from other Asian counterparts, industry experts said.

The uptick in demand, reflected in robust subscription rates for bond issues this year, is expected to drive a resurgence in offshore bond fundraising by Indian companies, rebounding from a 14-year low witnessed in 2023.

Rishi Jalan, Citigroup's Head of Asia-Pacific Debt Syndicate, projects a major upswing in India dollar-denominated bonds for 2024, forecasting figures ranging between $15 to $20 billion, reminiscent of peak years in the past. Of this volume, an estimated 30 to 35 per cent is expected to constitute high-yield bonds.

Notable among potential issuers eyeing offshore bonds are Delhi International Airport, Greenko, SAEL in renewable energy, and Oravel Stays, the parent company of OYO. Additionally, financial sector players like Indiabulls Housing Finance and Shriram Finance are reportedly in preliminary discussions to explore bond offerings.

Though talks are in initial stages, these firms are contemplating raising sums ranging from $300 million to $500 million each, with proceeds primarily aimed at debt refinancing.

Commentary from industry insiders highlights the favourable market conditions driving Indian high-yield borrowers to explore offshore opportunities. Shoaib Ahmed, Director of Debt Capital Markets at ANZ, notes that restricted access to markets in certain geographies, coupled with optimism surrounding India's economic outlook, has facilitated access for Indian borrowers.

During the first quarter of the year, issuers including State Bank of India and HDFC Bank collectively raised $3 billion through dollar bonds. Meanwhile, high-yield issuers like IRB Infrastructure Developers and Adani Green Energy witnessed robust responses to their offerings, with demand exceeding the issue size by seven to eight times.

Eric Liu, a credit desk analyst at Nomura, highlights investors' cautious stance towards China's economic outlook, contrasting with a positive sentiment towards India's growth narrative within the global emerging markets landscape.

Nomura's findings indicate that the cost of raising funds for high-yield issuers in the offshore market is approaching 9 per cent, comparable to domestic market rates.

Moreover, recent deals have attracted a broader spectrum of investors, including sovereign wealth funds and real money investors, extending beyond traditional regions like Latin America, Central and Eastern Europe, the Middle East, and Africa.

Sanjay Guglani, CIO of Silverdale Capital, underscores the robust fundamentals of Indian high-yield corporates, alongside stable economic policies and the potential impact of the upcoming general elections, as key factors bolstering investor confidence in Indian bonds.

(With Reuters inputs)