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Wednesday, 16 January 2019

India Bond House

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Axis Bank’s role in developing the onshore and offshore rupee bond market made it the clear leader in a transformational year for the Indian debt capital markets.

Axis opened up the offshore rupee market with roles on the first corporate Masala issues, ensuring a promising start for the new asset class, while it reacted quickly to regulatory changes to maintain its leadership at home.

It was joint bookrunner on July’s groundbreaking Rs30bn (US$448m) Masala issue from Housing Development Finance Corporation, ending a long wait for the inaugural corporate offering and proving that an international market does exist for Indian companies in rupees.

It was also one of the joint bookrunners for NTPC’s Rs20bn debut Green Masala bond in August, which attracted more international investors because of the green tag.

HDFC’s Masala bonds were priced at 8.33% for a three-year tenor, flat to its domestic curve, overcoming concerns that Indian issuers would have to pay a premium to print in rupees offshore. The issue attracted strong interest from high-quality institutional investors and non-resident Indians, with some fund managers taking a positive macro view on the yield and Indian currency.

The issue, which was later tapped, paved the way for more Indian companies to diversify their funding base without taking on additional currency risk.

NTPC’s Green Masala bonds pushed the tenor out to five years. It was priced at 7.48%, inside the onshore curve and 20bp inside the Thomson Reuters AAA five-year benchmark for government bonds. NTPC managed to price at the tight end of the guidance because of the added attraction to climate-focused European funds, thanks to its adherence to the Green Bond Principles.

In the domestic market, Axis was at the forefront as the central bank’s efforts to lure more Indian companies away from bank loans began to pay off.

In the infrastructure space, it used smart structuring to get investors comfortable with bond issues from Vadodra Bharuch Tollway and Essel Lucknow Raebareli Toll Road.

Axis Bank was also a joint arranger for Crompton Greaves Consumer Electricals, which came to the market for the first time since the spin-off from its parent with a Rs6.50bn three, four and five-year issue in separately transferrable redeemable principal parts.

It also worked on several Additional Tier 1 offerings for Indian banks, as enthusiasm for the product grew due to the low-yield environment.

Axis topped the rupee bond league table, with Rs581.0bn of deals and a 22.1% market share during the awards period, combining innovation with strong deal flow.

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