India Inc ECB at $18 b up 70% in 2010

 During the period between January to October 2010, there were 547 issues of external commercial borrowings (ECBs) raising a total of US$17.93 billion or Rs 82,800 crore. At this level ECB in 2010 was 70 per cent higher than $ 10.59 billion from 430 issues in the same period in 2009.

According Delhi-based SMC Global Securities Limited report even average size of ECBs during January-October 2010 was a third bigger at $33 million than $25 million in 2009. Some of the large corporates that took advantage of low rate of interest are: Indian Oil Corporation, EXIM Bank, Reliance Industries, HPCL Mittal Pipelines, Idea Cellular, Bhushan Steel, Adani Power, Tata Steel, Power Finance Corporation, etc. SMC Global Securities Ltd Strategist & Head of Research Jagannadham Thunuguntla said: Many large companies needed to borrow more to support bullish economic activities in India. Besides, their good fundamentals enabled them to borrow cheap from abroad.

According banking experts ECB by a strong company can save a good 200-300 basis points in interest rates. While debt was in good demand, foreign currency convertible bonds (FCCBs) lost its sheen in 2010. FCCBs are issued with a coupon and with an option to the lender to convert them into equity shares at a pre-determined price. 

During January-October 2010  there were just 12 FCCB issuances raising about US$1.35 billion. During the same period in 2009 there were 13 FCCBs raising about US$2.23 Bn the report said.

DM