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Exim Bank hits Australian debt market, sells AUD 200 mn bonds

Exim Bank has hit offshore bond markets again and raised AUD 200 million in debt in a five- year debt issue programme offering a coupon of 5.76 percent, merchant bankers said Thursday.

Mumbai: Exim Bank has hit offshore bond markets again and raised AUD 200 million in debt in a five- year debt issue programme offering a coupon of 5.76 percent, merchant bankers said Thursday.

"Exim Bank has raised 200 million (USD 209 million), denominated in Australian dollar through a bond sale programme. The issue got over 50 global investors on board," officials of Deutsche Bank, one of the merchant bankers, told PTI here.

The bank priced the five-year senior unsecured notes at mid-swaps plus 2.10 basis points and the five-year issue carries a coupon of 5.76 percent, they said.

One basis point is equal to 0.01 percent.

A coupon payment on a bond is a periodic interest payment that the bondholder receives during the time between when the bond is issued and when it matures.

One of the salient features of the deal is that this is the second Australian dollar-denominated bond sale by the bank after its AUD 41 million last April. So far only Exim Bank has tapped the Australin debt market.

The bank had plans to raise only AUD 100 million but the issue had so much demand they doubled it, the book-runners said, adding the bank looked at Australian dollars as part of its ongoing efforts to go in for diversification of currencies as well as investor base.

The money was raised by the London branch of the bank and will be listed on the Singapore Stock Exchange. Merchant banking sources said this is part of the USD 6-billion medium term note programme of the bank. The unsecured notes have a Baa3 rating from Moody's and BBB- by S&P.

Exim Bank has entered into a swap agreement to convert the Australian dollars, mobilised through this bond issue, into US dollars, sources said.

The other book-runner to the deal, which will mature in April 2018, was ANZ Bank.

In Janaury, Exim Bank had raised USD750 million a dollar-denominated bond issuance, at 4 percent.

When reached for his comments, Exim Bank Chairman and Managing Director TCA Ranganathan said he was away in Durban for the BRICS summit.

"Over the past few years, Exim Bank has distinguished itself as one of the savviest bond issuers," David Greenbaum, head of debt capital markets for South Asia at Deutsche Bank said.

"Entering the Australian debt market made sense for Exim from an economic perspective, but also opened up a new channel of potential funding for the bank and other issuers from the country going forward," Greenbaum added.

On the tight pricing that the bank managed to get, Sunil Agarwal, head of institutional client group at Deutsche Bank, said, "as a policy-bank, Exim enjoys a unique sovereign proxy status that only a few issuers can claim."

On the large investor participation, Agarwal said for an international investor looking for Australian dollar exposure, Exim was a natural entry point into Indian credit and offered a safety and quality that appealed to buyers from both Asia and Europe.

He said over 50 investors participated in the deal with those from Switzerland formed the largest at 35 percent, followed by Singapore (33 pc), Hong Kong (13 pc), other Europeans (15 pc) and other Asians (4 pc).

On investor type, Agarwal said retail constituted 65 percent, banks 13 percent, MFs 10 percent, insurers 5 percent, and others formed 7 percent.

On January 8, Exim raised USD 750 million by selling 10-year senior, unsecured bonds at a coupon of just 4 percent.

Last year, the bank had tapped the Singapore dollar bond market and also raised money by selling the Uridashi bonds, which are bonds denominated in a foreign currency and sold directly to Japanese household investors.

So far this year, nearly a dozen companies like RIL (USD 800 million) Bharti (USD 1.5 billion), ICICI Bank, IDBI Bank, PowerGrid, Tata Comm, HDFC Bank, Suzlon (USD 650 million), among others, have tapped the offshore debt makets and raised nearly USD 6.75 billion.