Idbi Rs 250 Crore Flexibonds To Hit Market In A Week

The Industrial Development Bank of India is slated to hit the market with a Rs 250 crore flexibonds issue in the first week of February.

The financial institution had also recently tied up with two multilateral agencies -- ADB and KFW -- for a $150 million long-term loan.

IDBI had on January 15 closed its Flexibonds-11 issue. The issue which was for Rs 250 crore, had opened on December 28, 2001, and collected Rs 309 crore. According to senior IDBI officials, the encouraging trend in the issue was that more than a lakh of investors had applied.

IDBI is also coming out with its third and final issue of flexibonds of Rs 250 crore in March this year.

The financial institution had recently tied up with the Asian Development Bank for a $100 million loan with a tenure of 20 years. The loan was fixed at 120 basis point above Libor (1.91 per cent). IDBI is also receiving a loan of $50 million from KFW. However, this loan is broken up into three parts. The loan can be used for the power sector, minor ports, urban mass transport system, special economic zones and cyber parks.

According to senior officials, IDBI has also managed to bring down the commission on government guarantees from 1.2 per cent to 0.60 per cent. Also this tranche of loans is not subject to withholding tax as it would have otherwise increased the cost of the loan by 100-120 basis points.

Of the $50 million KFW loan, $25.5 million has been taken at a 0.75 per cent interest with a 40 year maturity period. Officials pointed out that the loan has a 10 year grace period.

The second part of the loan, of approximately $12.5 million, has a 10 year maturity and a five year grace period. This loan is however linked to KFW's borrowing rate with government guarantees (from the German government). The third part of the loan -- also of approximately $12.5 million -- will be similar to the second tranche but without a government guarantee.