Exim Bank raises $500 million from overseas investors at 4% interest

MUMBAI: The Exim Bank today successfully closed a benchmark dollar-denominated overseas five-year bond sale programme, raking in $500 million from overseas investors at a coupon of just 4 per cent - the cheapest ever by an Indian company at this tenure.

At 3.48 per cent above the US treasuries, this bond issue beats the $1.25-billion bond sale that State Bank of India sold at 4.125 per cent coupon or 3.75 per cent over the US government bonds, and makes it the cheapest ever five-year money raised by a domestic financial institution till date.

"Yes, we have successfully closed a benchmark bond sale programme, raising $500 million from overseas investors. The issue was oversubscribed five times or $2.5 billion. Priced at a coupon of 4 per cent, this is the cheapest ever dollar-denominated five year bond sale by a domestic financial institution to date," Exim Bank Chairman and Managing Director TCA Ranganathan told reporters.

The bank gave an initial pricing guidance of 3.75 per cent over the US T-bills. But final pricing closed much lower, as the markets have been waiting for some quality Indian paper, said a note from StanChart, which was one of the lead managers and book-runner to the issue along with Citigroup.

Exim Bank's senior fixed-rate notes makes the third $bond transaction for the Exim Bank since 2010 and marks the largest-ever $bond transaction for the bank, Ranganathan said.

The issue has a Baa3/BBB- rating from agencies, including S&P while the SBI issue had a Baa2/BBB- rating.

The issue maturing in August 2017 traded as tight as 3.48-3.55 per cent over US treasuries, while the SBI bond traded at 3.60 per cent, despite a weaker broader market, the bank said.