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.
