Indian borrowers take fancy to Japanese debt

livemint.com:

₹0.55. “The advantage of borrowing in a currency that is expected to depreciate is that the borrower has to repay that much less," said Anindya Banerjee, vice-president of currency derivatives and interest rate derivatives at Kotak Securities. At the same time, Banerjee warns that what matters is not how much that particular currency has moved in the past, but how it is expected to behave in the future.

Among companies, JSW Steel, Rural Electrification Corporation (REC), Power Finance Corporation (PFC), and Housing and Urban Development Corporation (HUDCO) have cumulatively raised yen-denominated debt upwards of ¥200 billion (about ₹11,000 crore) in the past 11 months, according to publicly available company disclosures. These include loans as well as bonds. The largest amongst these was REC, which has raised about ¥153 billion ( ₹8,390 crore) since January over three separate debt facilities.

Among governments, this April, the Tamil Nadu government opted for a loan of $300 million in the Japanese yen from the World Bank for developing urban water and sanitation services, as per a World Bank disclosure. According to a senior executive at a leading multilateral development bank, several other state governments, too, are in active discussions to raise new debt in yen or even swap their existing dollar-denominated loans to yen. Even the Indian government chose to raise a $250-million loan in yen from Asian Development Bank (ADB) last December, according a release from the Press Information Bureau.

This was ADB's first yen-denominated sovereign loan to India. The funds are to be used to finance the construction of the 82-km Delhi-Meerut Regional Rapid Transit System (RRTS) corridor. When contacted, a spokesperson for REC