Axis Bank set to raise $240 mn

Private sector lender Axis Bank would raise $240 million through the sale of US commercial papers (USCPs) over a week. The debt instruments have been rated ‘A-1’ by Standard & Poor's rating agency and the fund raising programme would be supported by Citibank NA.

“The funds raised would be deployed in our overseas operations, including lending,” said Parthasarthy Mukherjee, head (treasury and international banking), Axis Bank. He said global interest rates continued to be low and the cost would be passed on to borrowers.

The USCPs would have a maximum tenor of 360 days and would be issued through Axis bank's Dubai International Financial Centre branch. Axis Bank had raised $200 million through USCPs last year. Other Indian private sector banks have also been tapping this market for funds.

Currently, the 12-month London interbank offered rate (Libor) is 0.77 per cent. “With the slowdown in the US economy, interest rates are not likely to be raised, at least in the near future. Hence, it is a good source to raise short-term debt,” said Gopal Bhattacharya, managing director and head (global markets) India, Societe Generale.

Axis Bank has not yet decided the coupon rate on the commercial papers (CPs) yet. “Even if they issue CPs at a spread of 200 basis points, it would be much cheaper than raising funds in India and converting them into foreign currency,” said a bond dealer with a domestic brokerage.

Source: Business Standard