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India Inc eyeing GDRs
By agencies
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Thursday, 26 May 2005, 19:30 IST
NEW DELHI: With hardening of global interest rates, India Inc appears to be less attracted to foreign currency convertible bonds (FCCBs) and is instead looking to public issues in global and domestic markets to raise funds.
Most of the companies, which were earlier thinking of FCCBs, are now looking towards the GDR route.
"Attraction of FCCBs has come down with the hardening of interest rates in the international market," London Stock Exchange head of business development for India Hugh Sandeman said.
FCCBs offer a fixed interest rate and a premium when the bonds are converted into equity at the maturity period.
As interest rates have gone up, the premium offered on FCCBs has come down. This makes them less attractive for corporates, Sandeman said.
GDRs are becoming more attractive as LSE has decided to relax norms and allow Indian companies to list their shares on a separate market segment from July, which will exempt firms from disclosing their income as per stringent global accounting norms.
The new market segment will allow Indian companies to disclose their incomes as per Indian Generally Accepted Accounting Principles (GAAP).