MUMBAI, Sept 28- Indian companies
are rushing to lock in borrowing costs ahead of a potential rate hike by the
central bank, with about $3 billion of rupee debt issuances lined up over the
next few days.
Large Indian
conglomerates, state-run firms, infrastructure investment trusts and non-bank
finance companies are preparing at least 290 billion rupees ($3.02 billion) of
short- to long-duration bond sales ahead of the central bank's October 7
monetary policy decision.
Some of the
prominent corporate borrowers issuing debt include Reliance Industries,
Vedanta, Delhi International Airport, Adani Airport Holdings and JSW Energy,
seeking an aggregate 185 billion rupees, while infrastructure-related firms
Cube Highways Trust, Interise Trust and India Infradebt are eyeing 60 billion
rupees.
"Issuers who
have a view that rupee interest rates will go even higher are locking in
rates," said Akshay Naik, India head of debt capital markets at Citibank.
"We expect
issuances, particularly from large, frequent and high-rated issuers to be
absorbed by investors."
LIKELY RATE
HIKE
A large majority
of market participants expect the Reserve Bank of India to raise interest
rates, with further liquidity-draining measures on the cards. If they're right,
it would mark the RBI's first rate hike since February 2023.
"With the
October policy approaching, there is some uncertainty around the direction of
interest rates and liquidity conditions," said Harish Reddy, co-founder,
Stable Money, a fixed income investment platform.
The policy
decision has as its backdrop signs of broadening inflation in India and hikes
by major central banks globally, including by the US Federal Reserve.
Expectations for RBI policy have shifted over the past month amid a pickup in
inflation and stubbornly higher oil prices, bringing prospects of an October
rate hike into focus.
Several foreign
banks, including Citi and Deutsche Bank, have brought forward their rate-hike
calls from December to October, while market pricing reflects a higher
likelihood of a longer tightening cycle.
While a rate hike
hanging over the market's head is pushing up corporate issuance, there is also
"a lot of liquidity in the (banking) system to absorb this supply,"
said Ankit Gupta, founder and MD, Digifinn, an online bond trading platform.
($1 = 95.9775
Indian rupees)
(Reporting by
Khushi Malhotra and Dharamraj Dhutia; editing by Nimesh Vora and Ronojoy
Mazumdar)
