INSUBCONTINENT EXCLUSIVE:
markets sputter and local-currency funding from domestic banks dries up.
Borrowers that are facing challenges in the credit market are
finding solace in dollar-denominated loans, even as non-performing debt at local banks, volatility in the rupee and uncertainty over
national elections next year add to pressure on financing costs.
The downfall of shadow lender ILFS group has fueled concerns about default
risks, making banks cautious and pushing up the cost some firms pay for loans at home
of corporate and institutional banking at Mizuho Bank India
costs are heading up for some borrowers, but had fallen so much earlier that they are still lower this year on average
Average margins on Indian five-year foreign-currency loans are 130 basis points more than London interbank offered rate in 2018, the lowest
since 2005, according to Bloomberg-compiled data
In comparison, spreads over Treasuries for dollar bonds of local issuers have risen 109 basis points this year to 275, according to ICE
BofAML index data.
Recent ExamplesSome Indian companies are stomaching the recent uptick in loan rates
10 basis points higher than its similar-tenor facility in 2017
