Exim Bank First In­dian Is­suer of ‘Formosa’ Bonds, Raises $400 m

The Economic Times - - Money -

Mumbai: State-run Ex­port-Im­port Bank of In­dia Mon­day joined the ex­pand­ing list of lenders such as South Korea’s KB Kook­min Bank to tap the ris­ing in­vestor wealth in Tai­wan, lever­ag­ing the pric­ing edge the coun­try of­fers to over­seas is­suers of float­ing-rate debt.

The bank be­came the first In­dian lender to raise $400 mil­lion by sell­ing “Formosa” bonds, which are sold in Tai­wan in cur­ren­cies other than the lo­cal Tai­wanese cur­rency. The float­ing-rate bonds will ma­ture in five years. “This is the first ever Formosa deal by an In­dian fi­nan­cial in­sti­tu­tion,” said Shashank Joshi, head of global cor­po­rate bank­ing at Bank of Tokyo-Mit­subishi UFJ. “Also, this was the first bond sale with five-year float­ing rate by an In­dian is­suer. There was an over­whelm­ing in­vestor re­sponse.”

The bonds have been priced af­ter ad­ding a 100-ba­sis point spread over thethree-mon­thLIBOR(theLon­don In­ter­bank Of­fered Rate), which is now pegged at 1.31%. With a change in the three-month bench­mark, the yield will keep chang­ing.

Exim Bank has ob­tained a lower yield on in­vestor de­mand, as the spread was ini­tially pegged at 115 ba­sis points. The order book was more than dou­ble the ac­tual size at $870 mil­lion, and in­cluded in­vestors such asas­set­man­agers,re­tire­ment­funds, and pri­vate banks.


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