Companies may get cheaper borrowing costs through the club arrangements.
A surging dollar is fueling bets that developing nations may also raise rates faster than anticipated
The good days for India Inc.
in the offshore syndicated loans market may soon be over, as foreign
banks pinched by their own rising borrowing costs balk at the lowest
lending rates in a decade.
"India may be approaching a turning point for loan pricing to come up a bit to facilitate syndication," said Samuel Tan, co-head of loan syndication and distribution for United Overseas Bank in Singapore.
As the Federal Reserve gears up for more interest-rate hikes, a surging dollar is also fueling bets that developing nations may also raise rates faster than anticipated. That's all pressuring some global banks' cost of funding. As a consequence, there are signs that foreign lenders are growing more selective with Indian loans, even as they cheer signs that the nation is moving toward cleaning up about $210 billion of non-performing assets.
In another sign of weakening demand from global banks, more Indian companies have been forced to rely on a smaller group of lenders to underwrite borrowings or to use their relationships to strike so-called club deals.
Companies may get cheaper borrowing costs through the club arrangements. But doing so makes them reliant on a smaller group of banks, creating the risk that any shift in those lenders' willingness to extend funds could hamstring the firms.
Indian Railway Finance Corp. hired lenders to arrange loan facilities, more than two months back, but is yet to start marketing to a wider group of banks in syndication. IndusInd Bank's $500 million loan led by six mandated lead arranging banks, or MLABs, and signed in April, only drew three banks in syndication. The $249 million loan for Great Eastern Shipping Co. unit, Greatship India, attracted two participating lenders which took over half of the allocation. Birla Carbon, a holding company of conglomerate Aditya Birla Group, opted to only seek lenders at top-ticket levels, rather than seeking a larger group of banks. Hindustan Petroleum Corp., which mandated a $300 million 3Y facility earlier this year, has decided against marketing the loan in general syndication, according to people familiar with the matter, who are not authorized to speak publicly and asked not to be identified.
Read more on https://www.ndtv.com/business/good-days-for-india-inc-in-foreign-loan-market-may-soon-end-report-1858546
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"India may be approaching a turning point for loan pricing to come up a bit to facilitate syndication," said Samuel Tan, co-head of loan syndication and distribution for United Overseas Bank in Singapore.
As the Federal Reserve gears up for more interest-rate hikes, a surging dollar is also fueling bets that developing nations may also raise rates faster than anticipated. That's all pressuring some global banks' cost of funding. As a consequence, there are signs that foreign lenders are growing more selective with Indian loans, even as they cheer signs that the nation is moving toward cleaning up about $210 billion of non-performing assets.
In another sign of weakening demand from global banks, more Indian companies have been forced to rely on a smaller group of lenders to underwrite borrowings or to use their relationships to strike so-called club deals.
Companies may get cheaper borrowing costs through the club arrangements. But doing so makes them reliant on a smaller group of banks, creating the risk that any shift in those lenders' willingness to extend funds could hamstring the firms.
Indian Railway Finance Corp. hired lenders to arrange loan facilities, more than two months back, but is yet to start marketing to a wider group of banks in syndication. IndusInd Bank's $500 million loan led by six mandated lead arranging banks, or MLABs, and signed in April, only drew three banks in syndication. The $249 million loan for Great Eastern Shipping Co. unit, Greatship India, attracted two participating lenders which took over half of the allocation. Birla Carbon, a holding company of conglomerate Aditya Birla Group, opted to only seek lenders at top-ticket levels, rather than seeking a larger group of banks. Hindustan Petroleum Corp., which mandated a $300 million 3Y facility earlier this year, has decided against marketing the loan in general syndication, according to people familiar with the matter, who are not authorized to speak publicly and asked not to be identified.
Read more on https://www.ndtv.com/business/good-days-for-india-inc-in-foreign-loan-market-may-soon-end-report-1858546
Read the similar article on https://www.ndtv.com
This post is from https://www.ndtv.com
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