Exim Bank Hits International Bond Market With $1 Billion Issue
File photo of Exim Bank
The Exim Bank is in the international bond market with an over USD 1 billion dollar money issue, merchant bankers have said. The bank is in the dollar money market with a seven-year bond issue, selling Reg S bonds worth at least USD 1 billion. The issue will be closed the US markets on Monday, two merchant bankers told PTI.
The sources, however, refused to share more details like likely pricing and citing confidentiality. Regulation bonds are issued by foreign issuers in the US debt market and are denominated in US dollars, but resident American citizens cannot subscribe to them.
This is the first international debt sale from the country in the new year and i-bankers are expecting a higher debt money to come to the domestic shores this year given the record low interest rates in the western markets. Companies will also be raising money to meet the likely capex or repayments demands as the economies slowly return to normalise after the year-long pandemic. In the first week of January 2020, the bank had raised USD 1 billion in 10-year dollar money at record low rate of US Treasury plus 1.70 bps. Normally, the bank issues 5-, 7- and 10-year debt to meet its project export needs and other international commitments through the government to overseas administrations.
In 2020, the foreign exchange (forex) debt issuance was dull due to the pandemic and was one of the lowest in recent years, with domestic issuers collectively mopping up only around USD 14 billion through the year. International rating agency Fitch has assigned proposed senior bond sale by the Export-Import Bank (Exim Bank) at BBB-, reflecting the sovereign nature of the issuer.
It added that the proposed senior notes constitute Exim Bank's direct, unconditional, unsubordinated and unsecured obligations. These will at all times rank pari passu among themselves and with all of its other unsubordinated and unsecured obligations, Fitch said rating the issue on par with the sovereign rating of the country. The rating reflects the agency's expectation of a high probability of extraordinary state support to the bank.
In 2020-21, the government infused Rs 1,300 crore in fresh equity in Exim Bank. In 2019-20, it had received Rs 6,500 crore from the government, increasing its common equity tier-1 ratio by 191 basis points, from nearly 18 per cent in 2019-20.