While most of India’s shadow lenders remain caught in a prolonged cash crunch at home, some of the highest-quality financiers are finding that yield-hungry investors in the global loan market are eager to extend credit.
That’s helped reduce average margins on overseas loan deals for non-state Indian shadow lenders to a record low, according to data compiled by Bloomberg. Highly-rated firms including Tata Capital Housing Finance Ltd., L&T Finance Ltd. and Fullerton India Credit Co. have sought loans in the global market in recent months.
The top-rated non-banking financing companies are able to get loans in the domestic market as well, but they are finding that borrowing costs are often lower overseas. Investors, especially those from Japan and Taiwan, are happy to lend to them. The ease with which the firms are able to raise funds contrasts with their lower-rated peers, who are struggling to get financing due to investor concerns about bad debt and defaults in the sector.
A dollar loan by Housing Development Finance Corp. in August shows how it often makes sense for financiers to borrow overseas rather than at home