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Hedging Costs at Decade Low Lure India Firms Back to Dollar Debt

  • Potential issuers of dollar notes include Adani Ports and SBI
  • Cheaper access to dollar credit could help as debt comes due

Indian borrowers stung by the pandemic have found financing costs in the dollar bond market too pricey recently. But that’s changing as their currency hedging costs decline.

Six-month Mifor swap rates, a combination of the London interbank offered rate and dollar-rupee forward premiums used by India’s borrowers to hedge exchange rate risks, are near a nine-year low. The cheaper hedging costs will give an additional impetus to companies, including Adani Ports & Special Economic Zone Ltd., Lalitpur Power Generation Co. and the nation’s biggest lender State Bank of India, seeking to issue dollar notes.