IL&FS arm raises $100 mn via dim sum bonds

ITNL Offshore, an arm of IL&FS, has raised $100 million by selling dim sum bonds, which are denominated in yuan and issued in Hong Kong.

The three-year securities carry a coupon rate of 5.75 per cent and are guaranteed by the Export and Import (EXIM) Bank of India, sources familiar with the development told Business Standard.

Deutsche Bank, Royal Bank of Scotland, and UBS AG managed the issue.

This is the second time that an Indian company is raising funds by selling dim sum bonds. In 2011, IDBI Bank had raised close to $100 million through this route, which was managed by Hongkong and Shanghai Banking Corporation. Sources said the bond proceeds will be used to refinance the loans, which IL&FS borrowed to fund its acquisition of 49 per cent stake in a Chinese toll road project last year. “A part of these proceeds will be converted into dollar and will be used to repay the existing loan,” a source said.

Bankers said while a few Indian firms hadexpressed interest in raising funds through sale of dim sum bonds, they would not be able to do large-ticket issues. “Indian banks typically look to raise at least $500 million through foreign currency bonds. In dim sum bond market, the appetite is only for $100-200 million issues,” said a banker. According to bankers, the difference in rates in the Chinese dim sum bond market and the Indian debt market combined with IL&FS need to refinance its loan has encouraged the company to issue these bonds.