Exim raises $250 m at 140 bps over Libor

A day ahead of the Union Budget, Export-Import Bank of India, raised $ 250 million five year bond at 185 basis points over five year US treasury rate. This is equivalent to Libor plus 140 basis points.

The $200 million issue got an overwhelming response of $550 million due to which Exim decide to raise $50 million more taking the total bond size to $250 million, a merchant banking source in London said.

The paper of Exim, which is 100 per cent owned by the Government of India, was treated as a sovereign paper in the overseas market. Both Moodys and Standard & Poors rated the paper on a par with the country rating. Citigroup and Deutsche Bank are the lead managers for the issue.

"This is a very aggressive pricing. IDBI's five year paper in the secondary market is trading at 220 basis points over the five year US treasury and ICICI's four year paper is trading at 170 basis points above US Treasury rate. The Exim paper clearly shows that the India story is not over," says a merchant banker.

This is the first government-guaranteed external commercial bond (ECB) issue since the new government has come to power. S Sridhar, executive director, Exim Bank told Business Standard from London: "This is the largest single tranch bond raised by Exim. The overwhleming response to the issue has clearly shown that Exim is becoming a global entity."

On the back of huge investors response, Exim revised downwards the price guidance on its five-year bond to 185 basis points over comparable US treasuries.

The initial price guidance was set at 190-200 basis points over treasuries, equivalent to Libor plus 150 basis points. At 185 basis points over US treasury, it is equivalent to Libor plus 140 basis points.

About 40 per cent of the subscription came from Europe. Groupwise, 40 per cent subscription came from fund managers, 35 per cent banks, 20 per cent insurrance and pension funds and 5 per cent retail and high net worth individuals.