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Informist, Monday, May 25, 2026

 

--ICRA official: See parity in funding via corp bonds if RBI MPC hikes rates 

--Moody's official: Global corporate bond markets fairly competitive

 

MUMBAI - There is an incentive for Indian corporates to issue dollar-denominated bonds if withholding tax is removed and the cost of hedging dollar exposure reduces, Vikash Halan, managing director, corporate finance group, at Moody's Ratings said at a joint event by ICRA Ltd. and Moody's Ratings Monday.

 

"So, if you ask me what the trend could be, it could be if the government puts the right incentive, whether that is withholding tax being taken out or whether there is some sort of subsidy for hedging your dollar exposure, you could see the trend towards getting some more intensive funding, which is not going to go out (offshore) when the market is down," Halan said. Market participants are pitching for a concession of 150-200 basis points in dollar-hedging costs. So far in 2026, the rupee has depreciated nearly 6% against the dollar, a fall which has been exacerbated since the West Asia war triggered a surge in crude oil prices. 

 

Halan's comments come at a time when bankers and economists have asked the Reserve Bank of India and the Centre to opt for measures to draw capital inflows into the country. Earlier this month, Informist had reported that the finance ministry has received proposals from market participants to lower the current withholding tax of 20% on government bonds to 5% or even nil.

 

Halan said the international bond markets "remain open" and fairly constructive, especially for Indian issuers, most of which are investment grade. "Not just for Indian issuers, but even in the region, we have seen a very healthy amount of bond issuers at spread levels that have not really reflected a very high degree of risk," Halan said.

 

Compared to loans, however, given the current interest rate trajectory, prospects of fundraising through bonds is currently "not that good," even for domestic issuances, K. Ravichandran, executive vice-president and chief ratings officer at ICRA, said at the event. While bonds are already pricing in rate hikes by the RBI's Monetary Policy Committee, loan rates are lower. If the rate-setting panel does hike the repo rate, there will be parity between funding through loans and bonds as loan rates reprice, Ravichandran said.  End

 

Reported by Cassandra Carvalho and J. Navya Sruthi

Edited by Deepshikha Bhardwaj

 

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