India’s equity markets are taking off,
with heavily indebted corporates completing equity placements
to deleverage. But market participants have expressed concerns
about risk factors in their offering documents.
Post-election India’s capital
markets are reaching new heights, and heavily leveraged
corporates are rushing to raise equity to decrease their
They’re moving so quickly that they
often don’t have time to receive approval from
their lending banks – even if it’s
technically required in their loan agreements’
covenant package. And one enforcement action may trigger
Market participants outside India are puzzled that
heavily indebted corporates are testing their
lenders’ inaction on covenant breaches. Those
inside India are less surprised because companies in certain
sectors need to raise equity.
Given the fickle nature of the capital markets, it
might be best to raise deleverage first and negotiate
"The first wave of companies that have hit...