ICICI Bank Ends Axis' 16-Year Run as Rupee Bond Market King

(Bloomberg) --

ICICI Bank Ltd. ended Axis Bank Ltd.’s 16-year reign as the largest arranger of rupee-denominated corporate bonds as sales climbed to a record last year.

India’s second-largest lender by market value managed 980.3 billion rupees ($11.8 billion) of offerings in 2023, including self-led transactions. That’s 17% of the total, according to data compiled by Bloomberg. HDFC Bank Ltd. stood second, with deals worth 797.4 billion rupees. 

Axis Bank, which dominated the local-currency bond market from 2007 to 2022, came in third after arranging 763.5 billion rupees of transactions.

The lender “focused on higher fees business instead of just chasing volumes,” Neeraj Gambhir, group executive and head of treasury, markets and wholesale banking products at Axis, said in an interview.

Axis will stick to the same strategy this year and look to arrange more deals for AA to A rated issuers as well as private credit firms, Gambhir said. The lender will also focus on issuance from real estate investment trusts and InvITs as it expects them to become big borrowers in the bond market, he added.

ICICI Bank didn’t reply to an email seeking comments. 

Businesses in the world’s fastest-growing major economy raised a record 10.4 trillion rupees selling bonds in 2023, and Gambhir expects issuance to increase by 15% this year as companies will likely take advantage of borrowing costs coming down if global central banks cut interest rates as expected.

Gambhir expects the new investment guidelines for banks that take effect in a few months to provide further impetus to the corporate bond market. India’s central bank in September allowed lenders to include company notes in their held-to-maturity book, and not be required to mark-to-market against yield movements.

“Apart from refinancing needs, we expect capital expenditure cycle to gain strength in the second half of the calendar year prompting firms to tap the bond market,” Gambhir said. Spreads between corporate and sovereign debt will remain tight as the supply of company notes is unlikely to exceed demand, he said. 

(Updates with Gambhir’s view on bond spreads in final paragraph.)

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