Following recent government-approved ventures into overseas bond markets, Indian corporations are looking to the United States as a source of much-needed investment funds.
With the aim of raising about US$2 billion, Indian firms are attracted to the US by the lower borrowing costs than those available in the domestic market.
The successful overseas issues by Reliance Industries and Tata Engineering & Locomotive Company (Telco) has paved the way for public-sector majors, Hindustan Petroleum and the Steel Authority of India to look to issue bonds in the US over a minimum 10-year period.
Similarly, Hindalco Industries, flagship company of the Aditya Birla Group, and engineering giant Larsen & Toubro, are venturing into the Yankee bond market.
Two major financial institutions - the Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India - will join these blue-chip companies in the race for US funds within the next two months.
Roadshows for the $150 million ICICI issue have started, and indications are that the issue may be priced at 150 basis points above 10-year US Treasury bills.