Bonds issued by Indian companies saw their biggest foreign inflow in five years as the nation’s largest ever low-grade local currency debt sale drew a slew of overseas investors attracted by the high yield on offer.

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Goswami Infratech Pvt, a Shapoorji Pallonji group company controlled by tycoon Shapoor Mistry, raised Rs 143 billion ($1.7 billion) by selling zero-coupon bonds via private placement on Wednesday, Bloomberg News reported. The yield on the offering was at 18.75 percent.

The overseas interest in the high-yield offering saw foreign funds buy Rs 47.1 billion worth of Indian local company debt on Wednesday, the biggest inflow since 2018. Inflows in the nation’s corporate bond market have been muted with only 15.2 percent of the foreign investor limits having been utilised so far, or around Rs 1 trillion. That is a fraction of what the government debt market has seen with index-eligible bonds — or those bonds that foreigners can buy freely — seeing Rs 245.75 billion of inflows this year.

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Investors in the bonds included Cerberus Capital Capital Management LP, Varde Partners LP and Davidson Kempner Capital Management LP, according to people aware of the developments, but not authorised to speak as the information is private. Emails to Cerberus and Varde were unanswered while Davidson Kempner declined to comment. A spokesperson for Shapoorji Pallonji wasn’t immediately available when reached for comment regarding details about the investors.

The offering comes at a time when investors are gradually turning bullish on India’s credit market as robust growth and improved corporate balance sheets have eased concerns about repayment risks. Also, aiding sentiment is the Indian central bank that has joined most global peers in pausing interest-rate hikes amid slowing inflation.

Amrish Baliga, managing director and head of investment banking at Deutsche Bank, discusses India’s credit markets and where he thinks they’re headed. He speaks on Bloomberg Television.

“Investors have been waiting in the wings for the longest time,” said Amrish Baliga, managing director and head of investment banking at Deutsche Bank AG in Mumbai told Bloomberg Television on Friday. “A trade like this is a complete blow-out in terms of investors across various spectrums whether it is institutional funds, family offices and multilaterals.”

More such issuances are in the pipeline, according to Deutsche, which was one of the arrangers to the sale.

“Investors have been enthused with the yields and collateral package,” Baliga said, referring to an asset that acts as a security for the lender. “It augers very well for India’s credit market.”

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