 "Dollar shopping: RIL, Adani join Essar to convert rupee debt")
A month after EssarSteelraised $1 billion in external commercial borrowings in order to repay some of its rupee debt, other corporate biggies like Reliance Industries, JSW Steel and Adani Enterprises have joined the bandwagon to raise funds from abroad.
[caption id=“attachment_1005579” align=“alignleft” width=“380”]  Reuters[/caption]
The reason for this sudden fund-raising activity at a time when the investment climate in India is so morbid is torepay high-cost rupee loans. A weak currency is an advantage since corporates will have to borrow fewer dollars to repay rupee loans.
According to a report in the Business Standard,Reliance is raising close to $1.75 billion, Essar Steel is raising $2 billion as pre-export finance, Adani plans to raise up to $2 billion and JSW Steel wants to raise $900 million to swap its rupee loans worth Rs 5,500 crore.
Paying of loanswith a massive dollar kitty help firms on saving costs.
“The refinancing not only repays the Indian lenders, it also unencumbers the company’s assets. This leaves elbow room for management to raise more debt later if needed,” " Hemant Dharnidharka, the Bangalore-based head of credit research at SJS Marketshad told Bloomberg in an interview last month.
In other words, dollarised debtwill help companies with a natural forex hedge such as export earnings not only save finance costs but also release its assets held as collateral with domestic lenders.
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