IDBI Bank to raise $1 b this fiscal from overseas markets

IDBI Bank plans to mobilise up to $1 billion in 2012-13 from overseas markets via syndicated loans and by issuing bonds. Last year, it had raised about $720 million.

The resources so raised will be given as loans to Indian companies with overseas expansion plans.

Companies whose foreign currency convertible bonds are coming up for redemption could also tap the bank for funds, said Mr Melwyn Rego, Executive Director, IDBI Bank.

In January 2013, the bank will update the shelf document filed with the Singapore Stock Exchange for the medium term note (MTN) programme.

The plan is to enhance the size of the MTN from $1.5 billion to $2.5 billion, said Mr Rego.

Ever since it filed its shelf document in 2007, the public sector bank has raised $720 million via the MTN route.

According to Mr R.V. Iyer, Chief General Manager, IDBI Bank last year raised $465 million via syndicated loans; $102 million equivalent by issuing Dim Sum bonds; and $ 147 million through reverse enquiries (investors expressing interest in investing in short-term instruments issued by the bank).

Swiss Franc Bonds

IDBI Bank has mobilised CHF 110 million ( around Rs 682 crore) by issuing bonds denominated in Swiss Francs. The bonds have a maturity of three-and-a-half years and carry annual coupon of 3.125 per cent.

The main investors in the issue were private banks and high net-worth individuals.

“The Swiss Franc bond market has offered our bank strategic benefits in terms of investor diversification and attractive funding rates,” said Mr Rego.

Infra Debt Fund

IDBI and seven other banks have come together to float an infrastructure debt fund as sponsors, said Mr Rego.

The fund has been set up as a non-banking finance company with a paid-up capital of Rs 300 crore.

To accelerate and enhance the flow of long-term funds to infrastructure projects, the Finance Minister in his Budget speech for 2011-12 had announced setting up of Infrastructure Debt Funds (IDFs).

According to Mr Anuj Jain, Analyst, CARE Ratings, at a capital-adequacy ratio of 15 per cent and risk weight of 50 per cent, an IDF with Rs 300-crore capital will be able to borrow almost Rs 4,000 crore and lend to infrastructure projects.

kram@thehindu.co.in