The Stressed Asset Resolution announced in India’s 2021-22 Union Budget proposed the establishment of a novel twin structure to clean up bank balance sheets in India. In this dual structure, the primary company, the National Asset Reconstruction Company Limited (“NARCL”), is a public sector asset reconstruction company mandated to acquire and aggregate non-performing assets (“NPAs”) (i.e. the ‘bad bank’). The second company is a private sector asset management company established to focus on the management and resolution of the NPAs held by NARCL, the India Debt Resolution Company Limited (“IDRCL”). Two years on, it is fair to say that the aggregation and resolution of NPAs by the bad bank in the Indian banking sector have fallen short of initial expectations.Continue Reading India’s bad bank, two years on…
Utkarsh Small Finance Bank’s IPO: what it means and why it matters
The Bank – who they are
Initially operating from the small town of Varanasi in Uttar Pradesh, India, Utkarsh was established in 2009 as a Micro Finance Institution. Over the years it has evolved into a Small Finance Bank with the objective of creating “umeed” (hope) amongst the unbanked population by providing micro, small and medium enterprise (MSME) loans, housing loans (with a specific focus on affordable housing), savings accounts and other essential financial services to the under-served low-income rural and semi-urban population in north and east India. The micro-banking segment accounts for about 66 per cent. of the bank’s gross loan portfolio.Continue Reading Utkarsh Small Finance Bank’s IPO: what it means and why it matters
India’s sovereign credit rating – stick or twist?
Read time: 3 minutes 15 seconds
In June 2020, three of the large global rating agencies – Moody’s Investors Service (“Moody’s”), Fitch Ratings (“Fitch”) and S&P Global Ratings (“S&P”) reviewed India’s sovereign credit rating. Interestingly, the agencies diverged in their approaches – Moody’s, which had previously rated India a
Indian Bond Defaults and Bond Restructurings: More Scheming Ahead?
With yet another foreign convertible bond default hitting our desk, we cannot help but wonder what the future has in store for Asian convertible bonds and debt capital markets restructurings. This is particularly relevant when you consider that Indian companies and banks issued foreign currency bonds aggregating up to approximately $6.3 billion in the first quarter of 2013. This momentum continued throughout 2013 with Indian companies expected to raise another $10 billion by the beginning of 2014 by issuing foreign currency bonds in the international capital markets.
The Story so far
The convertible bond has always been a favourite of corporate India. Turning back the clock, one would recall that, particularly between 2005 and 2008, several companies across multiple industries used a variety of structures to access the international debt capital markets by issuing foreign currency convertible bonds (FCCBs) to investors. Such issuers included National Thermal Power Corporation, Indian Oil Corporation, Bharat Petroleum Corporation, Power Finance Corporation, Tata Steel, Tata Communications, Vedanta, Bharti Airtel, Amtek Auto and Rural Electrification Corporation (just a few names amongst an endless list of issuers back in the day).
Fast forward to 2014 and FCCB defaults have dominated recent headlines (think major companies like Sterling Biotech, KSL and Industries and Suzlon Energy).
Continue Reading Indian Bond Defaults and Bond Restructurings: More Scheming Ahead?