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10-year tenor likely; Exim Bank India may opt for billion-dollar bond issue

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Exim Bank, Exim Bank bond issue, Exim Bank in india, Exim Bank india bonds Exim Bank’s bonds usually get a fine pricing overseas as the institution is fully owned by the Indian government and its creditworthiness is seen aligned to the sovereign risk. (Reuters)

Exim Bank India is considering tapping the dollar bond market to raise close to a billion dollars by issuing a long tenor paper, sources aware of the matter told FE. “Exim Bank India might go for a billion-dollar bond issue with a tenor of about 10 years. The issue is likely to be a Reg S/144A,” a source said. In a 144A issue, investors from the US are also allowed to participate. Exim Bank’s bonds usually get a fine pricing overseas as the institution is fully owned by the Indian government and its creditworthiness is seen aligned to the sovereign risk. Bloomberg data shows that the last time Exim Bank India priced a 10-year dollar bond was in July 2016 when the lender had raised a billion dollars at a coupon rate of 3.375%. At that time, the issue was priced at 187.50 basis points over the 10-year US Treasury yield. The most recent dollar issue by the lender was a Formosa bond, which was priced in August 2017. The bank had priced its five-year paper at 100 basis points over the three-month dollar Libor to raise $400 million. A Formosa bond is a bond issued in Taiwan denominated in a currency other than the Taiwan dollar.

A banker FE spoke to said under current market conditions Exim Bank India’s 10-year dollar bonds might easily attract a spread in the range of 125-130 basis points over the US Treasury. With the US 10-year treasury yield at about 2.5%, this would translate to a rate of 3.75-3.80%.

However, an Exim Bank India executive told FE that the issue may not happen soon, as the medium term note programme is yet to be updated. “Our board meeting is in the third week of March. As far as the global medium term notes (GMTN) programme is concerned, the document should not be older than 135 days for a 144A issue. Since it is older than 135 days, it has to be updated. If a board meeting takes place, then something might happen. Otherwise, it looks like the issue may not go through before March,” the executive said.

Exim Bank India reportedly has a GMTN programme of about $10.5 billion out of which it has drawn over $6 billion.

Exim Bank India was established in 1982 by the government and meets the credit needs of exporters and importers. The lender states that its objective is to provide financial assistance to exporters and importers and function as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services.


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