MUMBAI: The Reserve Bank of India’s ( RBI) decision to allow bidders of insolvent companies to raise external commercial borrowings (ECB) to refinance rupee debt of insolvent companies could see increased India-focussed activity by overseas distressed assets investors. “It will permit resolution applicants to access cost-effective ECB funding to refinance rupee debt," said Rohit Raghavan, partner, L&L Partners. “For instance, it remains to be seen whether the current pricing cap on ECB loans is also relaxed for distressed companies," Kapoor added. Under the existing regulations, resolution applicants typically depend on debt financing to close acquisitions or to implement resolution plans for distressed assets. “The external commercial borrowings’ end use relaxation for CIRP is a welcome move to ease the debt market in order to facilitate resolution of the distressed assets.

Source: Mint February 07, 2019 19:40 UTC