Indian corporate bond issuance this year looks set to surpass 2013 and last year as expensive bank loans force companies seeking funding to try their luck in capital markets. So far, they have not been disappointed.
Indian firms have raised 335.9 billion rupees (US$5.40 billion) via short-and long-term corporate debt in a little over a month and a half this year, well on their way to matching the total of 2.3 trillion rupees raised in each of the previous two years, according to Thomson Reuters data.
Bank loans are relatively expensive even after the Reserve Bank of India reduced its key policy rate last month to 7.75 percent from 8 percent. Only three out of 45 domestic commercial banks have lowered rates, with most arguing they cannot cut costs for borrowers as they are facing tight cash conditions.
The central bank is loath to inject more funds into the overnight money market, saying it is providing sufficient funding, and that banks are simply not managing their cash well.
The average base rate of 10.25 percent at state-run banks is 100 to 150 basis points higher than the Reuters 10-year benchmark corporate bond rate, which has fallen to 8.33 percent from 8.58 percent at the end of last year. Yields have dropped on a fall in inflation, expectations of more RBI cuts and a surge in buying from foreign investors.
“The current spread between corporate bond yields and base rates is the maximum in at least the last few years,” said Sandeep Bagla, associate director at Trust Group, a brokerage and wealth management company.
The low yields have attracted new — and rare — issuers, which further bodes well for issuance this year. Among them in recent months have been Reliance Jio Infocomm Ltd, Jindal Steel and Power Ltd and Nuclear Power Corp of India Ltd.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
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