IDBI set to raise $1 bn via bond sale overseas
The first tranche of about $250-300 million could be sold in January with a tenure of as much as five years to meet credit demand as companies expand capacity.
By ET Bureau |
NEW DELHI: IDBI Bank plans to raise $1 billion, or Rs 4,500 crore, selling bonds in the overseas market in the next 12 months as it aims to benefit from lower borrowing costs abroad.
“We are planning to raise $1 billion from bonds by October 2011,” said IDBI Bank chairman and managing director RM Malla.
The first tranche of about $250-300 million could be sold in January with a tenure of as much as five years to meet credit demand as companies expand capacity. “We’re also looking at Malaysian Ringgit bonds,” said Mr Malla.
Indian banks such as ICICI Bank and corporates such as Reliance Industries are borrowing from overseas markets as the cost of funds is at least 3-4 percentage points lower than what it would cost them in the local market. While borrowing abroad reduces costs, there are chances of losses if the repayment commitments are not hedged and when there are adverse currency movements.
IDBI bank had earlier raised around $500 million through bonds, and this $1 billion would be raised in 3-4 tranches over the next 12 months.
“We are planning to raise $1 billion from bonds by October 2011,” said IDBI Bank chairman and managing director RM Malla.
The first tranche of about $250-300 million could be sold in January with a tenure of as much as five years to meet credit demand as companies expand capacity. “We’re also looking at Malaysian Ringgit bonds,” said Mr Malla.
Indian banks such as ICICI Bank and corporates such as Reliance Industries are borrowing from overseas markets as the cost of funds is at least 3-4 percentage points lower than what it would cost them in the local market. While borrowing abroad reduces costs, there are chances of losses if the repayment commitments are not hedged and when there are adverse currency movements.
IDBI bank had earlier raised around $500 million through bonds, and this $1 billion would be raised in 3-4 tranches over the next 12 months.
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