THIS week saw the launch of Reliance Industries' US$125 million Euro-convertible bond issue. The bonds were offered by lead manager Morgan Stanley at a premium of eight to 10 per cent, the first time that an Indian firm's bonds had been sold at a premium - without even a road show. In the 18 months since May 1992 - when Reliance became India's first corporation to sell bonds overseas - Indian companies have had established a good track record, with seven Euro-issues raising an aggregate $660 million. And before the year is out, another five firms will try to raise more than $500 million in the same market. The unexpected success of the bonds already in the market has made the mood of leading brokerage firms in London decidedly upbeat. Morgan Stanley, James Capel, Banque Paribas, Barclays de Zoete Wedd, Lehman Brothers are unanimous that these issues will do well in the short term. Recent trends are indicative of the enthusiasm for Indian paper. Barely a week ago, the Shipping Credit and Investment Company of India (SCICI) sold $100 million worth of convertible bonds at par, and found its issue over-subscribed more than 10 times. ''We under-estimated our strength; we could easily have charged a premium and got it,'' laments N.C. Singhal, SCICI's vice-chairman and managing director. ITC (formerly India Tobacco Co), which raised $50 million in September 1993, was another popular buy at a discount of five per cent. There are many who feel that these Global Depository Receipts (GDRs) were under-sold. The picture has changed drastically since last year when, handicapped by the securities scam, the closure of Indian stock exchanges for several weeks and the Ayodhya religious crisis, lead managers of Reliance and Grasim Industries (of the Aditya Birlagroup) offered heavy discounts on their GDRs. At the moment, though, Euro-convertible bonds are very popular. ''Today, with low interest rates and high share prices, I have to really scour the market to find an instrument which will give me a respectable yield,'' a fund manager of a Swiss bank has been quoted as saying. ''The eight to 10 per cent premium on Reliance bonds is a bit hard to swallow, but the four per cent coupon, besides the possible profit on shares, appears attractive.'' Viewed from the other side of the table, selling Indian Euro-issues is a profitable proposition, since India's high-risk status ensures high commissions. ''At present, every big name in the British primary market is chasing prominent Indian industrialists,'' says London-based Indian business writer Gita Piramal. ''Being a manager to an Indian Euro-issue has become something of a status symbol among the circle of large UK merchant banks.'' There are some fears that the wrong type of Indian company is approaching the international market for funds. Tata Iron and Steel, Essar Gujarat, Oil and Natural Gas Commission, Southern Petrochemicals and Grasim are some of the names to the fore. However, they are all dinosaurs of the raj. Not many of them are competitive in the market-place. The criteria that most fund management firms would look for are three - the product should be internationally competitive so that it can be exported; the firm should survive by its own abilities and not because of political favours; and it should have a technological edge in its specific industry.