By Suvashree GhoshInvestors will get crucial clarity in the coming days on the health of Indias 130 trillion rupee ($1.75 trillion) financial sector.The nations biggest developer is racing to refinance $324 million debt maturing March 13, and any stumble could lead to one of Indias largest offshore bond defaults.
Then, a day later, Yes Bank Ltd.
is due to announce its results, which would shed light on what pushed authorities to seize the lender last week.
Finally, March 17 is the deadline for Vodafone Group Plcs struggling Indian unit to pay $4 billion in overdue fees to the government -- if it opts for bankruptcy instead, the impact will ripple across the financial system.Prime Minister Narendra Modi can ill afford more stress; his economy is set to decelerate to an 11-year low and the coronavirus outbreak threatens to delay a revival.
Indias central bank has come out twice in less than a year in a rare show of assurance to depositors that the nations banking system is safe.This is an important week for India in terms of the potential revival of the economy, given the close interlinkages between the financial and corporate sector, said Madhavi Arora, an economist at Edelweiss Securities Ltd.
in Mumbai.
Some light on the resolution of corporate stress this week would be crucial in determining the banking and non-banking financial systems health, at a time when domestic growth is fragile and credit conditions are tight.Here are details of the key events:Lodha RepaymentLodha Developers International Ltd.
last week fell short of the top end of a fundraising range in a pivotal deal to refinance its existing note due March 13, and was set to launch a tap this week.
It also needs to meet conditions, including setting aside cash and getting consent from some of the groups other lenders, before it can use the proceeds of the new bond.
Moodys Investors Service had earlier warned that Lodha didnt have an alternate plan to repay, and that any failure to meet the complicated conditions would likely lead to a default.Yes Bank EarningsYes Bank, which was due to report results for the October-December quarter last month, delayed the announcement to March 14 saying it was busy trying to raise capital.
In the interim, Yes Banks worsening liquidity condition and lack of commitments from potential investors forced the central bank to overthrow Yes Banks board and effect the nations biggest bank rescue that could wipe out some bondholders.
The extent of the deterioration in its financials will be clear on Saturday.Vodafone DuesVodafone Idea Ltd., which has more than $14 billion in net debt and hasnt reported a profit in more than two years, must pay Indias government $4 billion by March 17 or risk contempt of court proceedings.
In December, Chairman Kumar Mangalam Birla warned of a potential collapse in the absence of any relief over the payment; British partner Vodafone has completely written off the value of its 45% holdings in the venture and signaled it isnt keen to invest more.
Banks will have to pay the price if any telecom firm files for bankruptcy, Rajnish Kumar, chairman of State Bank of India, the nations largest lender, said last month.
Indias government may clear a bailout package this week, the Times of India reported, without saying where it got the information.--With assistance from P R Sanjai and Bijou George.