Mumbai: Indian banks are likely to raise upto $9 billion in overseas bonds issuance as corporates grow their foreign business organically and through acquisitions, Nomura said in a recent research note.
Such issuance from Indian banks, which expect their foreign currency loans to grow by 25-30%, are likely to be easily absorbed easily given India’s strong growth story, Nomura said.
So far this year, Indian banks and financial institutions have issued $3.2 billion of dollar-denominated senior bonds, and Nomura estimates their total supply to touch $7 billion-$9 billion this year compared with only $1 billion that matures in 2011.
In the note, dated 19 April, Nomura said it expects issuers like Syndicate Bank and Punjab National Bank to make a debut in the near-term, while ICICI Bank, State Bank of India, IDBI Bank, United Bank of India and Axis Bank may all look at overseas bond issues in the second-half of 2011.
Nomura sees the bulk of the expected bond supply to be in the 5-5.5 year tenor, as most banks do not require funding for 10-year maturity and above - except perhaps IDBI, due to its focus on infrastructure loans.
A more favourable fundamental outlook and attractive spread levels make Indian bank senior notes more desirable than its Korean counterparts, the note added.