Exim Bank sells $750 mn bonds at 4 per cent

Jan 08 2013, 22:18 IST
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Exim Bank sells $750 mn bonds at 4 per cent. (AP) Exim Bank sells $750 mn bonds at 4 per cent. (AP)
SummaryExim Bank today set yet another benchmark in raising cheap debt from overseas investors.

Exim Bank today set yet another benchmark in raising cheap debt from overseas investors by selling USD 750 million worth bonds through a European debt sale programme that was overbought by 8.5 times and at a coupon of 4 per cent.

"The 10-year issue, the first from Exim Bank, has been a rocking success as it has been timed well. The pricing at 4.119 percent is the cheapest ever we have raised and is cheaper than the previous two 5-year issues this fiscal, as the India story got a major leg-up in the recent past from the finance ministry," Exim Bank Chairman and Managing Director T C A Ranganathan told PTI today.

Explaining the timing as the reason for cheap pricing, he said global liquidity improved since the resolution of the US fiscal cliff. Coupled with this, the bank got the benefit of being the first issuer from India in 2013.

Since traders were holidaying till last weekend, they lapped up the issue.

Ranganathan said there has been so much demand that the bank had to increase the issue size from the initial USD 500 million to USD 750 million, making it a benchmark issue.

The issue was oversubscribed 8.5 times, he said, adding this is part of the bank's European medium term note of USD 6 billion, of which it has raised USD 1.5 billion in FY13.

Asked about the rationale for a 10-year money (Exim Bank had in July raised USD 500 million five-year money end July and another USD 250 million in September), Ranganathan said, "I have lots of 10-year commitments. So, I have to keep long-term money. Also, 10-year issues get better pricing." More than half of the money raised has been committed to a clutch of foreign governments and Indian firms, he said.

On the successful completion of the bond sale, Citi India, the book-runner to the issue along with StanChart, said: "The price tightening of 40 bps from initial guidance (of 260 bps) to final pricing, is primarily attributed to Exim Bank's strong credit and lineage, track record, remarkable market momentum and the highest quality order book.

"The notes are rated Baa3 by Moody's and BBB- by S&P," Citi India head of capital markets origination Rajiv Nayar said.

On the huge success of the issue, Nayar said, "Exim Bank's inaugural 10-year US dollar bond exceeded all expectations and priced inside their existing

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