Core Insights - Indian companies raised over $5 billion through external commercial borrowing (ECB) for the first time in the current financial year, totaling $5.336 billion in January 2026, an increase from $4.435 billion in December 2025 [1] Group 1: ECB Overview - ECBs are commercial loans obtained by eligible resident entities from recognized non-resident entities, adhering to specific parameters such as minimum maturity and maximum all-in-cost ceiling [3] - The Reserve Bank of India (RBI) recently issued liberalized ECB guidelines, allowing higher borrowing limits and the ability to convert ECBs into non-debt instruments [6] Group 2: Market Conditions - Rising domestic corporate bond yields have prompted companies to seek cheaper funding overseas, with "AAA" rated corporate bond interest rates increasing to 7.53% in January 2026 from 7.12% in December 2025 [2] - The liberalized ECB norms may encourage Indian companies to access overseas markets, potentially stabilizing the weakening Rupee amid geopolitical uncertainties [7] Group 3: Notable Fundraising - Major companies that raised significant funds under the ECB-automatic route include Microsoft Corporation (India) Pvt Ltd ($726.87 million), Muthoot Finance, and ONGC Videsh ($600 million each) [4] - Under the ECB-approval route, Export-Import Bank of India raised $1 billion, and NTPC raised $152.15 million [5] Group 4: Borrowing Limits and Costs - Eligible borrowers can raise ECBs up to the higher of outstanding ECBs up to $1 billion or total outstanding borrowing up to 300% of net worth [8] - There are no caps on the cost of borrowing, which must align with prevailing market conditions, although specific regulations apply for loans with an average maturity of less than three years [9]

Bankers said several issuers that stayed away from offshore markets amid a sharp decline in the rupee are likely to now tap overseas debt.As part of the bilateral trade agreement, the US would slash tariffs on Indian goods to 18% from 50%. This has already triggered buying in Indian bonds and a 5–10 basis point spread compression is seen across in names such as “There has been visible buying in Indian bonds including Vedanta, PFC and REC,” said a bond investor. “We are seeing spread compression in the rang ...