NBFCs bonds rally 11-36% offshore, what triggered the rally? – Economic Times

Dollar bonds of last-mile financiers such as IIFL Finance, Manappuram Fin, Muthoot Fin and Shriram Transport Fin rallied 11-36% from record lows in the past two-three weeks, indicating increasing appetite overseas for debt sold by Indian NBFCs.

Deutsche Bank, Varde Partners, Avenue Capital, SC Lowy, and Blackrock were among those seen negotiating secondary market deals, even as high-yield bonds from other emerging markets such as Mexico found few takers.

Deutsche Bank declined to comment; others did not reply to ETs mailed queries.

The RBIs timely and well calibrated measures have thrown a lifeline and stemmed the sell-off in dollar bonds issued by Indian companies, said Hemant Mishr, founder at Scube Fixed Income, a Singapore-based fund. Against the backdrop of an impending global recession and lingering uncertainties we see investors seeking comfort in the relative safety of bonds.

Indias central bank announced a second set of measures to boost the financing economy on Friday. These bonds had plunged as much as 50 percent, ET reported on March 27.

In the overseas dollar bond market, global distressed investors find big upside for local NBFCs, said Manish Wadhawan, CEO, Serenity Macro Partners, which deals with offshore investors. With RBI booster doses, these companies should survive the current crisis before they resume the growth journey in the next few years.

Power Finance Corp. bonds have gained 11%, trading at a little premium to face value. IIFL Finance has jumped 36%, largely erasing discounts. Manappuram, Shriram and Muthoot have seen prices jump 15-27%.

High-yield Indian NBFC papers offer 5-7%, compared with 3.5-6% for investment-grade paper.

The six-month dollar-based London Interbank Offered Rate plunged about 60 basis points to 1.13% since February.

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NBFCs bonds rally 11-36% offshore, what triggered the rally? - Economic Times