Exim Bank hits dollar debt market with over $500-m issue

Mumbai, Jan 18 (PTI) The Exim Bank has hit theinternational debt market with a dollar-money issue of atleast USD 500 million as part of its USD 10-billion medium-term note programme, according to merchant bankers.The bank has so far drawn over USD 6 billion out ofits USD 10-billion medium-term notes programme.The move comes amidst rising interest rates in the USand ahead of the new financial year back home, when demand forexim loans normally spikes."The Exim Bank is in the market with a benchmarkissue. It is planning to draw more than USD 500 million, in a10-year dollar bond sale, depending on the demand scenario,"the banker told PTI here today.He expects a good pricing for the issue as it has thesovereign guarantee. Normally, Exim Bank’s overseas bonds geta fine pricing as it is wholly-owned by the government and itscreditworthiness is aligned to the sovereign.But he said the pricing for the Reg S/144A issue isnot availbale as the US market is yet to open. In a Reg Sissue, resident investors from the US are not allowed toparticipate while in a Reg S/144A issue they can.In July 2016 when the Exim Bank raised USD 1 billion,it had offered a coupon of 3.375 per cent and was priced at187.50 bps over the 10-year US Treasury yeilds.Last August, its most recent dollar issue, a Formosabond, was priced at 100 bps over the three-month dollar Liborto raise USD 400 million. A Formosa bond is issued in Taiwanbut denominated in a currency other than the Taiwanese dollar.It can be noted that the price for Indian debt hascome down since Moody’s upward revision of the country'ssovereign ratings by a notch in over a decade to Baa2 with apositive outlook.The Exim Bank’s Reg S/144A will be drawn down from itsMumbai heaquarters, and will be listed on both the LondonStock Exchange International Securities Market as well as theSingapore Exchange Securities Trading, the i-banker added.Global rating agency Moody's has assigned a Baa2rating to the senior unsecured notes issue with a stablerating outlook."The rating incorporates the bank's baseline creditassessment of Ba3 and our assessment of a very high dependenceon, and the very high government-backed probability of supportfrom, government," Moody’s said in a note issued fromSingapore.Rival agency Fitch Ratings also rated the issue atBBB-, which is equated with the Indian sovereign's rating.According to markets data collated by Bloomberg,dollar-denominated bond sales from the country soared almost90 per cent to an all-time high of USD 15.2 billion in 2017.It is expected to rise further this year as the US Fedkeeps its word on normalizing interest rates in the world’slargest economy.Since Moody’s raised the sovereign ratings lastNovember, there has been a spike in demand for quality Indianpaper. And the response to issues since vouch for this.ICICI Bank had mopped up USD 500 million in a 10-year bond issued in December, which got oversubscribed at over USD 850 million, while Reliance Industries’ USD 800 million offering in November was oversubscribed more than 1.6x. PTI

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