Overseas loan: India’s first overseas syndicated loan since March tests water

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By Anurag Joshi

Indian businesses that have struggled to borrow money from international banks in recent months amid the pandemic are closely monitoring the rates of a data firm seeking a dollar loan.

Mu Sigma Inc., a data analytics company founded by Indian entrepreneur Dhiraj Rajaram, markets a refinancing loan of up to $ 100 million to so-called general syndication. No other Indian borrower has marketed an overseas facility to a large pool of lenders since March, and India’s offshore lending volumes fell to an 11-year low so far this quarter.

Bloomberg

A successful deal with Mu Sigma would be one of the first signs that foreign lenders are becoming less reluctant to provide funds to Indian companies, perhaps easing the struggle the corporate sector has faced to raise funds. Being able to raise liquidity is crucial for Indian companies as they have to pay off a record $ 31 billion in foreign debt in 2020, according to data compiled by Bloomberg.

A $ 265 billion economic package unveiled by Prime Minister Narendra Modi’s administration in May has failed to allay investor concerns, with the cost of debt on dollar loans to local borrowers peaking in more than four years.

The margin on the Mu Sigma deal, at 400 basis points against Libor, is among the highest for Indian dollar loans this year. Investors will be watching whether soaring borrowing costs have also boosted lenders’ appetite for domestic businesses.

A representative for Mu Sigma did not immediately respond to an email from Bloomberg News seeking comment on the funding.

Even if the sale of Mu Sigma goes well, broader concerns may persist. The company, which is returning to the lending market after a hiatus of about three years, is a niche borrower among domestic firms tapping into the market, dominated by top-rated Indian conglomerates and larger state-owned companies.

–With help from Saritha Rai

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