Corporation Bank raises $100m to finance exports

Corporation Bank has raised a one-year syndicated yen loan equivalent of $100 million at an all inclusive cost of about 4.06 per cent. The funds will be used to provide foreign currency loans to exporters and also to meet some local general purpose needs.

The loan was arranged at Libor (3.74 per cent) plus 32.5 basis points, including costs such as arrangers' fees and legal expenses. A total of 11 banks participated in the loan syndication, which was lead arranged by Citigroup, Calyon, DBS Bank and Lloyds TSB Bank. Citigroup was also a lead arranger when Union Bank of India raised $125 million earlier in 2005.

The Corporation Bank loan was launched with an issue size of yen equivalent of $50 million with a greenshoe option of further yen equivalent of $50 million.

The issue size was increased to yen equivalent of $100 million due to strong investor response leading to a more than 100 per cent oversubscription.

V K Chopra, chairman, Corporation Bank, said, "The strong investor interest in the facility is a positive indicator of the growing interest among overseas lenders for strong Indian credits."

Corporation Bank had raised one-year syndicated loan of $80 million around six months earlier, which was exclusively to provide pre-shipment foreign currency loans for exports.

The foreign currency loan has been raised under the Reserve Bank of India's general permission for banks to raise funds overseas up to 25 per cent of their Tier I capital. Corporation Bank's capital adequacy ratio stood at 16.23 per cent at the end of March 2005.

During January-March 2005, a total of $1.1 billion was raised by Indian entities through syndicated loans. Calyon ranked first with a market share of 13.6 per cent, while Citigroup was at the third spot with a market share of 10.5 per cent.