India's investment trusts to expand debt fundraising as yields drop, analysts say
The real estate investment trusts (REIT) and infrastructure investment trusts (InvIT) raised over 178 billion rupees ($2.07 billion) in January-June, compared with 56 billion rupees in the same period last year, according to data aggregator Prime Database.
"Bonds offer a lower cost of capital compared to traditional bank financing, especially for highly rated trusts with stable, long-term cash flows," Arka Mookerjee, partner at JSA Advocates and Solicitors, which provides legal advice to corporates.
"The predictable income profiles of REITs and InvITs make them well-suited to debt financing, attracting institutional investors seeking yield-bearing, asset-backed instruments."
Corporate bond yields have tumbled over the last few months, as the central bank infused liquidity and slashed interest rates by 100 basis points, while banks have lagged in lowering their lending rates.
Embassy Office Parks REIT, IndiGrid Infrastructure Trust, Cube Highways Trust and Nexus Select Trust are among the firms that have tapped the bond market. Embassy REIT is planning another bond issue, Reuters reported last week, while others are also in early talks.
Bonds typically have fewer restrictions than bank loans, allowing REITs to use the fund across multiple properties within the portfolio, said Lata Pillai, India senior managing director and head of capital markets, JLL, a global real estate services firm.
The trusts, which need to disburse at least 90% of net distributable cash flows to unit holders, say cheaper funding allows them to provide better returns.
Bond fundraising provides clarity to these trusts on planning their finances, while top credit ratings attract marquee investors such as mutual funds and insurers.
"The AAA-rated structure gives greater credibility, visibility and better pricing," said Krishnan Iyer, chief executive officer at NDR InvIT, adding they also offer resilience to market volatility.
With infrastructure and real estate sectors gaining momentum, investors see REITs and InvITs as a compelling blend of fixed-income stability and long-term growth, said Suresh Darak, founder of Bondbazaar, an online bond trading platform.
($1 = 86.1700 Indian rupees)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ITV News
an hour ago
- ITV News
What the UK-India trade deal means for Wales
Sir Keir Starmer and India's Narendra Modi are set to agree a trade deal which is understood to be the largest of its kind for its economic impact on Britain. The UK-India trade deal is worth £6 billion in investment for the British economy and will be signed off on Thursday (July 23). It's set to deliver an £80 million boost to Wales's as part of the Plan for Change, with Welsh food and drink, renewable energy and creative sectors set to benefit following a reduction or elimination of tariffs. Secretary of State for Wales Jo Stevens said: 'Key industries in Wales, such as the renewable energy sector, the creative industries and food and drink producers will see immediate benefits. "On many goods tariffs will be reduced or eliminated. And Welsh businesses will also benefit from access to India's huge procurement market with increased protections so they can confidently export goods and services." According to the Wales Office, 256 Welsh businesses exported goods worth £226 million to India last year. Among those goods is Welsh lamb, which will be able to enter the Indian market duty free from day one, removing a 33% tariff. Gareth Parry, Head of Policy at Farmers Union of Wales, said: "It's really important that we do open up these market opportunities in Asia, the Middle East and other countries across the world. "But we also have to acknowledge how important our nearest trading partners are for the operation of our food system, such as the European Union. We've maintained throughout, ever since the Brexit referendum, that we support maintaining how strong the relationship with our EU partners is, particularly for the trading of Welsh agricultural goods." 'Developing market' for whisky producers Whisky tariffs will be slashed in half, according to the Government, and will fall further over successive years, while other industries including soft drinks, cars and cosmetics are also expected to see cheaper duties. Stephen Davies, Chief Executive of Penderyn Distillery, said: "We are developing our business and brand awareness in both domestic and travel retail sectors in India. It's an exciting and developing market for us. "The agreement to reduce tariffs will provide a better platform for us and our industry to develop links and build business over the next five years. These are exciting times." For Wales' energy sector, the deal will see lower tariffs and unprecedented access to India's public procurement market. The UK already imports £11 billion in goods from India but liberalised tariffs on Indian goods will make it easier and cheaper to buy their best products. The creative sector in Wales will also benefit from increased copyright protections.
The Herald Scotland
5 hours ago
- The Herald Scotland
Scotch whisky toasts major breakthrough in troubled era
UK Prime Minister Sir Keir and his Indian counterpart Narendra Modi today signed a free trade agreement (FTA) that both parties declared will bring major economic benefits to their respective countries. The deal is expected to pave the wave for significant investment by Indian companies to expand their operations in the UK and for British companies to boost exports to India (and vice versa) through the liberalisation of tariffs. The latter has been especially welcomed by the Scotch whisky industry, which has long highlighted the potential of India – the biggest whisky market in the world – as a lucrative overseas sales destination for the water of life. Read more: India has agreed to slash tariffs on Scotch whisky in half, with the import tax reduced immediately from 150% to 75% and then gradually cut to 40% over the next 10 years. Jean-Etienne Gourgues, chairman and chief executive of Chivas Brothers said: 'Signature of the UK-India FTA is a sign of hope in challenging times for the spirits industry. India is the world's biggest whisky market by volume and greater access will be an eventual game changer for the export of our Scotch whisky brands, such as Chivas Regal and Ballantine's. 'The deal will support long term investment and jobs in our distilleries in Speyside and our bottling plant at Kilmalid and help deliver growth in both Scotland and India over the next decade. Let's hope that both governments will move quickly to ratification so business can get to work implementing the deal.' More generally, India's average tariff on UK products will drop from 15% to 3%, which the Government says will make it easier for British companies making everything from soft drinks and cosmetics to cars and medical devices to sell into India. UK exports to India are forecast to increase by 60% in the long run, equivalent to an additional £15.7 billion of UK exports to India when applied to projections of future trade in 2040. Bi-lateral trade is expected to rise by 39%, equivalent to £25.5bn a year, when compared to 2040 projected levels of trade in the absence of an agreement. However, behind the celebratory tone of the announcement lurks a slightly sobering factor: the boost to UK GDP from the deal with India will amount to 0.1% by 2040. This pales somewhat into insignificance compared with the 4% hit to UK GDP estimated to have arisen from Brexit.
Reuters
5 hours ago
- Reuters
A.O. Smith lifts annual profit forecast, considers China partnership
July 24 (Reuters) - Water heater maker A.O. Smith (AOS.N), opens new tab will consider strategic partnerships and other alternatives for its China business, it said on Thursday after raising its annual profit forecast. "We believe the China market has substantial long-term prospects and are committed to realizing the potential upside inherent in the company's China business for our company," CEO Steve Shafer said. The Milwaukee, Wisconsin-based company is banking on higher market share in the second half of the year and cost savings from its restructuring actions. It now expects annual adjusted earnings per share to be in the range of $3.70 to $3.90, compared with its previous forecast of $3.60 to $3.90. Analysts on an average expected $3.78 per share for 2025, according to data compiled by LSEG. But second quarter revenue fell about 1% from a year ago to $1.01 billion. Sales from other parts of the world, including China and India, also fell nearly 2% to $240.1 million. Net income for the quarter ended June 30 was $152.2 million billion, or $1.07 per share, compared with $156.2 million, or $1.06 per share, a year earlier.
