Prime Minister Narendra Modi’s plan for India to build 25,000 kilometers of highway in the fiscal year starting next month is making the local currency bond market busy.
At least three road builders are set to sell notes in coming days to raise a total of 55.7 billion rupees ($724.9 million), the most from the sector in any month in about two years. Such builders priced the most securities in February in five months. The flurry comes after the government announced the highway plans in its budget at the start of last month.
The fundraising momentum is building. In addition to the highway builders themselves, some lenders including ICICI Bank Ltd. will seek bids Wednesday for as much as 80 billion in rupees notes that will fund infrastructure projects, as India Infrastructure Finance Co. also readies an issuance after a gap of nearly eight years.
“Issuers are rushing to lock in rates before borrowing costs rise too much and also to ensure project cost does not escalate due to lack of funds,” said Ajay Manglunia, managing director and head of institutional fixed income at JM Financial Ltd.
The average yield on top-rated three-year corporate bonds rose to 6.02% on Monday, the highest level in a month on concerns that a relentless surge in crude oil prices will fan inflationary concerns and darken the nation’s economic outlook. – Bloomberg