Bonds for Tata Motors and Adani Green fall as a weak rupee hurts India's credit

27 Jun 2022 , 10:53 AM

There were a few Indian corporations whose bonds fell as the rupee fell to a record low last week, including Tata Motors, which owns Jaguar, and mining behemoth Vedanta Resources Ltd.

In addition to those two-dollar notes that will be due in 2024, the foreign currency bond for Adani Green Energy and the debt for GMR Hyderabad due in 2026 both experienced declines, according to data compiled by Bloomberg.

These declines occur at the same time that the rupee reaches its lowest level against the dollar, making it more difficult for Indian businesses–which are already contending with the problem of rising interest rates–to pay their existing international debt or offer new bonds in other currencies.

The region’s credit market is being affected by higher US borrowing rates; this year, the Bloomberg index of investment-grade dollar bonds for Asia excluding Japan has lost more than 10% of its value.

Due to central bank regulations intended to stop the influx of “hot money,” offshore borrowing is banned in India. Just a small portion of the dollar bond deals in Asia this year was issued by the nation’s issuers.