Boi Arm Syndicating $30m Frn

BoI Finance Ltd, securities trading arm of Bank of India, has syndicated external commercial borrowings (ECB) for the banks corporate clients.

BoI Finance is currently in the process of syndicating $ 30 million floating rate note (FRN) for Supreme Industries Ltd. That apart, it is also syndicating external commercial borrowing (ECB) for Bharat Forge Ltd. BoI chairman and managing director did not reveal the details.

However, sources indicated that the tenure would be in the region of five to 7 years. BoI has adopted the risk reward principle, hence the ECB is priced depending on the credit rating of the company. It is usually over 150 to 200 basis points over Libor.

 

BoI has made a strong presence in the loan syndication as the bank is able to raise cheap money abroad.

Nearly 85 per cent of the core FCNR deposits of BoI, which is around $ 2 billion ( nearly Rs 6,000 crore) have been raised at Libid rates, nearly 150 bps below Libor.

This assures the bank a spread of at least 1.5 per cent even after syndication, he said.

BoI has already sanctioned nearly 100 ECB proposals amounting to $400 million from April 1, 1996, to April 30, 1997.

Bulk of the loans sanctioned are in the $3 million category and around 10 proposals over $3 million, Kathuria said. It has sanctioned ECB loan to Mangalore refineries and Petrochemicals Ltd (MRPL) amounting to $ 31 million.

MRPL has already drawn in more than $19 million for acquisition of assets, the balance of the loan would be drawn with the progress of the project. BoI has disbursed more than 40 per cent of the ECBs in the past four months.

That apart, is has brought in only 50 per cent of the loans in its books, that is the bank has syndicated half of its external commercial borrowings.

The bank has syndicated the ECBs to primarily two Japanese banks - Sumitomo Bank and the Asui Bank.