India’s weaker borrowers are facing a record amount of local-currency bonds coming due this quarter, but unprecedented stimulus steps may mean they are better equipped to pay back their debt than in the past.
Local companies ranked below AA+ need to repay a total of 383 billion rupees ($5.1 billion) of notes in the July-September period, the highest ever, according to Bloomberg-compiled data. Fundraising has become much cheaper for the firms though, after cash infusions of about $50 billion by the country’s central bank and a $277 billion rescue package for the economy by the government.
Still, investor demand for lower-graded firms’ debt hasn’t fully recovered after India’s shadow bank crisis made buyers more risk averse. About 66% of local-currency bond sales have been from those ranked AAA and AA+ during the current quarter, compared with around 55% before the collapse of infrastructure lender IL&FS in 2018 triggered turmoil in the banking sector, the data show.