Following S&P Global Ratings' recent upgrade of India's sovereign rating to BBB from BBB-, a wave of Indian companies are increasingly turning to overseas markets to secure funding. This upgrade, the nation's first in 18 years, reflects India's robust economic growth and sustained fiscal consolidation, making it a more attractive destination for global investors.
Several domestic firms, including Credila, Muthoot Finance, and Hero FinCorp, are collectively eyeing over $2 billion in overseas fundraising in the coming weeks. These companies anticipate that the improved rating will narrow the funding spread with their peers and reduce borrowing costs.
The upgraded sovereign credit rating is projected to lower overseas borrowing costs for Indian companies and non-bank lenders. Top-rated firms could potentially save 10-20 basis points on external commercial borrowings (ECB), which currently hover around 7.75%. This shift is also expected to broaden the global investor base for Non-Banking Financial Companies (NBFCs), potentially leading to spread benefits of 15-40 basis points.
Sammaan Capital, formerly Indiabulls, was among the first to capitalize on the upgraded rating, raising $300 million in three-year bonds at 8.95% last week. Muthoot Finance followed suit, securing $600 million through a 4.5-year bond at a 6.375% yield. Credila, now renamed HDFC Credila, is also seeking up to $600 million in loans from foreign lenders, typically marketed at spreads of 135-150 basis points over the Secured Overnight Financing Rate (SOFR).
Industry experts believe the upgrade should ideally help lower borrowing costs, though some of its impact was already anticipated. Raising funds through external commercial borrowings currently costs around 7.75% on a blended basis. However, with benign hedging costs, there is significant scope in this segment. For top-rated companies, current ECB borrowings are upwards of 7.2-7.5% on a fully hedged basis, which is still lower than domestic bank loans.
The one-year marginal cost of borrowing-based lending rate (MCLR), a benchmark for loans to corporate and NBFCs, is upwards of 8.50%. With the S&P upgrade, non-banking finance industry anchor ratings could shift up, further benefiting companies as the global investor base expands for papers from NBFI issuers.
The recent sovereign rating upgrade is expected to boost India Inc's overseas bond fund raising, which had been relatively subdued between April 1 and July 31 in the financial year 2025-26 (FY26). During this period, the Indian corporate sector raised only ₹613 crore through overseas bonds, compared to ₹22,844 crore raised during the same period in FY25. The S&P Global Ratings' upgrade is expected to make overseas funding cheaper for Indian borrowers, thereby providing a fillip to overseas bond issuances.
Vishal Goenka, Co-Founder of IndiaBonds.com, anticipates that the upgrade will attract greater foreign portfolio inflows into the bond market and offer better risk-adjusted returns for fixed-income investors. He also predicts lower international funding costs for large Indian corporates and foresees India securing a stronger position in the global emerging market investment landscape. The upgrade is expected to make external commercial borrowings (ECBs) cheaper for NBFCs, helping reduce borrowing costs and diversify their funding mix. In FY25, ECB registrations hit a record $61 billion, with NBFCs' share rising to 43%.
