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In a first, the Exim Bank has successfully concluded its maiden Formosa bond sale, netting UDS 400 million in 5-year notes from the Taiwanese market priced at a floating rate of Libor plus 100 bps.
This is not only the maiden offering by the Exim Bank in the Formosa bonds but also the first by a domestic financial institution, and is part of the developmental institution's USD 10-billion medium term note programme.
Formosa bonds are issued in Taiwan but denominated in a currency other than the new Taiwan dollar and are issued by the Taiwan branches of publicly traded overseas financial institutions with a credit rating of BBB or higher.
The Exim Bank said the proceeds from the 5-year Reg S floating rate Formosa bonds will be used to support Indian project exports, overseas investment by way of long-term credit and the lines of credit portfolio.
Exim Bank managing director David Rasquinha said, "the bank has been a pioneer in opening new markets for capital raising for other domestic issuers. We were the first to issue bonds in the Uridashi, Australian, Singapore and Samurai bond markets including being the first issuer of green bonds.
"This is another attempt to open an increasingly important market segment and we see more domestic companies following suit to tap the floating rate Formosa bond markets".
Due to good investor appetite, the Bank could bring down the final coupon payout by 15 bps at close to Libor plus 100 bps per annum for the inaugural 5 year USD400 million Reg S floating rate Formosa bonds.
The issue is also the largest Formosa bond issuance from the country and the first such transaction by a domestic financial institution.
The above transaction also marks the first 5-year floating rate note issuance by a domestic Issuer. It provides Exim Bank an opportunity to expand its investor base as the bonds are dual listed (Singapore and Taipei exchanges), the bank said.
The issue attracted good demand across 50 accounts with significant participation from high quality institutional investors.
The offering saw majority participation from banks (54 per cent), funds/insurers (38 per cent) and the rest private banks. The issue was distributed 87 per cent to Asian investors and balance to those in Europe and the Middle East.
The bonds are rated Baa3 by Moody's and BBB- by Fitch on par with the rating of the sovereign.
Standard Chartered Bank was the sole lead manager while JP Morgan and MUFG of Japan were the structuring agents.