Deutsche Bank today announced that volumes of US dollar, Euro and Yen (G3) bonds issued by Indian corporations in the first quarter of 2007 has reached USD3.94 billion, exceeding full-year 2006 volumes of USD3.2 billion. This 23% increase over last year’s market, a 511% rise over 1Q06, is being driven by India’s banking sector and a boom in demand for corporate credit.
Deutsche Bank was the number one arranger of G3 bonds for Indian issuers with a 33.84% share of this market in 2007. Deutsche Bank has continued to hold its position as the number one arranger of G3 bonds for Indian issuers since 2003, according to Dealogic.
Landmark transactions so far this year include a benchmark USD2 billion issue by India’s second largest bank, ICICI Bank, in January, which is the largest bond issue ever from an Indian borrower and set a new standard for India’s G3 market both in terms of size and pricing. Deutsche Bank was joint-bookrunner to the deal.
Gunit Chadha, Managing Director and CEO of Deutsche Bank, India, says historically cheap funding via global capital markets and India’s improved sovereign credit rating has created an optimal environment for banks in India to secure long-term funding.
“India’s banks are benefiting from strong domestic economic growth, which has driven demand for corporate lending higher. Foreign currency debt markets provide these banks and the Indian economy with an efficient and deep source of funding to fuel continued growth”, he said.
Funding received through G3 bonds is being typically kept offshore and used to provide Indian corporations, whose global standing has been raised through a number of high-profile foreign acquisitions, with an alternative source of funding via their own offshore lending programmes.
Piyush Gupta, Managing Director and Co-Head of Global Markets for Deutsche Bank in India, says demand for Indian G3 bonds amongst international capital markets investors remains strong.
“Investor demand for Indian bonds continues to outstrip supply, as India’s compelling growth story and improved credit profile make Indian bonds an attractive asset for yield and portfolio diversification”, he said.
On 30 January, India’s sovereign credit rating was upgraded to investment grade (BBB-) by rating agency, Standard & Poor’s, due to the country’s improved fiscal and economic position. Investment grade ratings from Moody’s Investor Services (Baa3) and Fitch (BBB-) have also been given.
Deutsche was awarded Best Bond House by leading capital markets publications IFR Asia and FinanceAsia in 2006. The Bank was also ranked second for USD, EUR and INR equity and equity-linked issuance in 2006, with USD1.48 billion worth of deals, according to Dealogic.
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