Exim bank to raise upto $300 million through panda bonds

MUMBAI: Exim Bank, a specialised lender to promote exports from India is all set to raise upto $300 million by issuing panda bonds.

Besides, it is also seeking a capital infusion of about Rs 1700 crore from the government for FY’17, the lender will also increase its focus on non-fund based business to grow it balance sheet.

A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in China. Even after the recent devaluation of the Chinese currency, issuers still see a price advantage.

“We are in negotiations with the Chinese authorities” said David Rasquinha, deputy managing director, Exim Bank. “ At today’s rates, the swap gives the lender a price advantage of upto 75 basis points ”

A sizeable amount of repayments is expected next year, for which the lender is preparing itself by raising overseas resources.

Exim recently raised $500 million from the Reg S market to support Indian project exports and overseas investment by way of long-term credit.

Meanwhile the bank has also sought additional capital infusion from the government of about Rs 700 crore from the government for the fiscal year 2016-17. “The Exim Act, allows for the paid-up capital to go up to Rs 10,000 crore. We have asked s 1700 crore for FY’17” said Mr Yaduvendra Mathur, chairman and managing director of Exim Bank.

The export-import promotion lender is also working on increase its business focus on non-core activities like guarantees. “We want to focus more on guarantee business,” Mathur said. “ It gives us a headroom for more expansion. Even for US Exim Bank, 90% of its business is through guarantees”.

Mr Mathur was speaking at the sidelines of a conference on new guidelines for lines of credit issued by the government, which allows a more transparent procedure of evaluation of project and demand for funds. It also gives more say to Exim in the process.