Top rupee-bond banker says time for Indian firms to issue

Indian companies should use the current yields which are at multi-year lows to raise long-term funding, according to the nation’s biggest rupee bond arranger since 2007.

“The market levels are absolutely fantastic, absolute yields are quite low at multi-year lows, spreads are quite tight,” Neeraj Gambhir, group executive and head – treasury, markets and wholesale banking products at Axis Bank Ltd., said in an interview with Bloomberg Television. “Our suggestion to borrowers is that current market scenario is very good and if they need long-term funding they should be accessing the markets.”

Companies borrowed an unprecedented 9.8 trillion rupees ($134.4 billion) through domestic bonds in the fiscal year ended March as they build up cash buffers to tide over the pandemic. The average yield on top-rated two-year rupee corporate notes fell 15 basis points on Tuesday to 4.63 per cent, the biggest decline since May 17. Notes touched a record low of 3.84 per cent in April.

India’s central bank will probably need to buy 3-4 trillion rupees of sovereign bonds this fiscal year to support the government’s borrowing program, Gambhir said. He expects the benchmark 10-year yield to remain near the 6 per cent mark in the ‘foreseeable future.’

The rupee is likely to remain around current levels and unlikely to depreciate immediately, Gambhir said.

“The strength of the rupee is reflective of the dollar weakness particularly against EM currencies and I don’t expect it to reverse in a meaningful way anytime in the near term,” he said.

The rupee was trading down 0.2 per cent to 73 a dollar on Wednesday.

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