Checks no bar, cos borrow $3.6 bn abroad
Indian corporates borrowed over $3.6 billion overseas in October 2007 despite regulatory curbs on offshore borrowing imposed in August.
By TNN |
MUMBAI: Indian corporates borrowed over $3.6 billion overseas in October 2007 despite regulatory curbs on offshore borrowing imposed in August. Over half of the borrowing ($1.9 billion) was by state-owned airline companies — National Aviation Company and Air India Charters and Jet Airways in theprivate sector.
October’s collections show a significant pick up in external borrowings over September when corporates raised $2.2 billion through overseas borrowing. In August, RBI had announced curbs on ECBs that sought to prevent foreign debt from adding to domestic liquidity. Following the cut in the Fed rate on Tuesday foreign borrowing will become still cheaper. Also the rate cut has put upward pressure on the rupee which will bring down the cost of hedging foreign currency borrowings.
Bankers say that figures for this month do not reflect the trend of corporates arbitraging low rates overseas for their local fund requirements. This is because over half of this months borrowings are by air carriers where most of the borrowing is used up overseas for aircraft acquisition and does not add to the inflows.
According to figures released by Reserve Bank of India, National Aviation was the largest borrower with a $1.02 billion borrowing in October. National Aviation is the holding company for the flag carrier Air India and domestic carrier Indian Airlines. Another state-owned airline company Air India charters (holding company for Air India Express) raised another $429 million. Jet Airways was the second largest borrower raising $477 million.
Borrowings by aviation companies are usually of not much concern to the regulator since the borrowing is in the form of leasing and hire purchase. The nature of the borrowing is also very long-term. For instance the $1.02 billion borrowing by National Aviation is for a tenure of 13 years and 3 months. Most of the airline borrowings are for a period of over 10 years. The shortest borrowing is a three-year $40 million ECB by Jindal Saw.
Other large borrowers were Tata Teleservices ($400 million), Exim Bank ($200 million) and Hyundai Motor ($150 million). October also saw $296 million being raised through the issue of foreign currency convertible bonds. Most of this was raised by Suzlon Energy ($200 million) which has indicated that the funds would be used for an overseas acquisition. Jindal Steel has also raised around $200 million through the FCCB route for import of capital goods.
October’s collections show a significant pick up in external borrowings over September when corporates raised $2.2 billion through overseas borrowing. In August, RBI had announced curbs on ECBs that sought to prevent foreign debt from adding to domestic liquidity. Following the cut in the Fed rate on Tuesday foreign borrowing will become still cheaper. Also the rate cut has put upward pressure on the rupee which will bring down the cost of hedging foreign currency borrowings.
Bankers say that figures for this month do not reflect the trend of corporates arbitraging low rates overseas for their local fund requirements. This is because over half of this months borrowings are by air carriers where most of the borrowing is used up overseas for aircraft acquisition and does not add to the inflows.
According to figures released by Reserve Bank of India, National Aviation was the largest borrower with a $1.02 billion borrowing in October. National Aviation is the holding company for the flag carrier Air India and domestic carrier Indian Airlines. Another state-owned airline company Air India charters (holding company for Air India Express) raised another $429 million. Jet Airways was the second largest borrower raising $477 million.
Borrowings by aviation companies are usually of not much concern to the regulator since the borrowing is in the form of leasing and hire purchase. The nature of the borrowing is also very long-term. For instance the $1.02 billion borrowing by National Aviation is for a tenure of 13 years and 3 months. Most of the airline borrowings are for a period of over 10 years. The shortest borrowing is a three-year $40 million ECB by Jindal Saw.
Other large borrowers were Tata Teleservices ($400 million), Exim Bank ($200 million) and Hyundai Motor ($150 million). October also saw $296 million being raised through the issue of foreign currency convertible bonds. Most of this was raised by Suzlon Energy ($200 million) which has indicated that the funds would be used for an overseas acquisition. Jindal Steel has also raised around $200 million through the FCCB route for import of capital goods.
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