India: Maiden sovereign international bond issue – ANZ

ANZ analysts point out that the Indian government announced a maiden foreign sovereign bond issuance in its full year FY20 (ending March 2020) budget on 5 July.

Key Quotes

“While the overall contours of the issuance are pending, it is expected to raise roughly 10% of the gross borrowing programme for FY20 (ending March 2020), or USD10bn, via this issuance.”

“The issuance is expected to supplement domestic savings at a time when household savings are becoming increasingly insufficient to fund the government’s borrowing needs. In the process it will also help set a benchmark for Indian corporates which are already raising debt abroad, and facilitate India’s inclusion in global debt indices where it currently lacks presence. However, such an issuance will also exacerbate exposure to global shocks, especially when currency hedging costs are high.”