External commercial borrowings registrations hit $42 billion in FY19
Mumbai: External commercial borrowings (ECBs) were fairly dominant in FY19 with all time high registrations of around $41.9 billion or Rs 2.93 lakh crore (at the exchange rate of Rs 70/$).
According to analysts, there has been a sharp rise in such registrations where companies have accessed ECB market for funding this year due to both cost and liquidity factors.
The highest share in total ECB registrations was from the financial services followed by petroleum sectors. Together they accounted for around 47 per cent of total registrations. This was followed by ferrous metals, telecom and power. These five sectors accounted for ¾ of the total proposals this year.
"Based on this scatter, it is not surprising the leading purpose of ECBs is for on-lending/sub-lending which is linked with the dominance of financial services. Working capital, refinancing of ECBs and rupee expenditure had similar shares in total between 12-13 per cent each and together with on-lending accounted for a little over 55 per cent of total registrations. ECBs that were directly linked with investment (i.e. capital goods, new projects, modernization, infrastructure etc.) accounted for around 20 per cent of total proposals," said Madan Sabnavis, Chief Economist at Care Ratings.
However bank funding was still the mainstay for most industries when it came to raising funds.
Bank credit growth was higher during this period relative to FY18. Incremental credit was Rs 9.44 lakh crore compared with Rs 5.84 lakh crore during last year.
However, the distribution was quite uneven and this was quite significant given the liquidity strains that were witnessed during the second part of the year. The same was also witnessed within industry where there was concentration in certain segments. The corporate bond market too did see an increase in issuances by the end of the year even though up to February it did look like that the level of interest in this segment was lower. But here too there was concentration in issuances to a limited set of sectors said Sabnavis in his report.
