India Inc’s external commercial borrowings rise to $10 billion in Q2

Overseas borrowing of Indian corporates gained momentum in the second quarter amid a pickup in the economic activity and the consequent demand for funds and low interest rates in the global markets.

India Inc’s external commercial borrowings (ECBs) more than doubled to $10.20 billion in the second quarter of the current fiscal as against $4.59 billion raised in the previous quarter.

ECBs plunged to a two-and-half-year monthly low of $700 million in May 2021 as the more virulent second wave of the pandemic and gloomy demand outlook forced companies to stave off their fundraising and expansion plans and focus more on cost-cutting measures.

The overseas fundraising has since picked up amid a fall in the fresh number of Covid cases and improving economic conditions across industries. ECB fundraising of Indian entities stood at $1.5 billion in June 2021, $3.43 billion in July, $2.85 billion in August and touched nearly $4 billion in September.

“Corporates have been increasingly tapping the overseas markets for funds in the recent months to take advantage of the low-interest rates in the global markets to refinance earlier debt as well as for meeting their business needs,” CARE Ratings said in its latest debt market review. Pratish Panjabi, Partner at Argus Partners, attributes the uptake in ECBs to the economic rebound after the second wave of the pandemic helped by massive vaccine coverage and fall in global interest rates resulting in the cheaper cost of funds.