Indian Exporters Securitizing Receivables

Indian diamond and jewelry exporters are securitizing their large receivables from abroad to raise funds at a relatively lower cost, to generate equity resources in the current tight credit market, the Economic Times reported.

Many of the companies adopting this route are large exporters, including DTC Sightholders, according to the report. The size of such securitization and bonds could range from $50 million to $200 million.

Under Indian regulations, international receivables cannot be assigned to a third party so the securitization is usually done through marketing or distribution arms based outside the country. Interest rates in the U.S. and Europe is much lower than India, as well.

“Low interest costs and facilities for issuing and listing bonds are prompting the jewelry companies to securities their receivables,” RSM Astute Consulting Director Suresh Surana to the newspaper.