ECBs

The government wants to boost the inflow of funds through foreign currency non-resident (bank) deposits, overseas foreign currency borrowings and external commercial borrowings.

Driven by central bank moves in February and June to lower hedging costs and ease rules, local firms are aggressively swapping out rupee loans for offshore funds.

The planned fundraising follows a successful $750 million dollar-bond sale by HDFC Bank earlier this week at a spread of 90 basis points over benchmark US Treasury yields.

Large PSU financiers, including Hudco, NaBFID, PFC, REC and IRFC, are preparing to raise over $5 billion overseas after RBI unveiled a special hedging facility for dollar borrowings late last week. The move is expected to make foreign funding cheaper and kindle external commercial borrowings.

The financier is likely to lean heavily on yen-denominated loans in FY27 as it looks to fund a widening infrastructure portfolio beyond the railway sector, chairman and managing director Manoj Kumar Dubey said in an interview.

RBI’s ECB reset marks a decisive shift, especially its decision to lift rate-band controls and go by market-set loan pricing. This signals confidence in India’s macro fundamentals. As firms gain easier access to global capital, they must formulate borrowing strategies with risks properly assessed.

While banks and non-bank lenders were the major borrowers in the dollar bond and loan market in the last three months, other companies have also expressed interest and are rushing to global rating agencies to rate their issuances. The reason: A fall in hedging costs.