Public sector lender IDBI Bank will double its medium-term note (MTN) programme to $3 billion from $1.5 billion, to raise foreign currency resources and meet the growing long-term fund demand of Indian companies.
On Tuesday, the Mumbai-based bank raised Singapore $250 million ($200 million) via MTN from Asian and European investors, predominantly high networth individuals. The order book was subscribed 12 times. The S$250-million bonds has three-year maturity and carries a fixed coupon of 3.65 per cent per annum.
Medium-term notes are bonds issued in foreign currency to international investors.
A Rego, executive director, IDBI Bank, said: “We raised about $920 million under MTN. The bank will renew the MTN programme in January 2013 and scale it up to $3 billion.” IDBI Bank will raise $1 billion through syndicated loans, multilateral agencies and MTN in the current financial year. These funds would be used for refinancing needs of Indian companies, including expansion and overseas acquisition plans.
It has already raised funds through the dim sum (CNH) bonds and the Swiss franc (CHF) bond market.
Another IDBI Bank official said the lender would look at raising funds in Thai baht, Australian dollar and Malaysian ringgit. With effective fund raising for tenures up to five years, the bank would focus on issuing bonds with higher maturity, like seven years.
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The Singapore dollar bond offering attracted interest from private banks (65 per cent), asset managers (17 per cent) and banks (18 per cent). Around 78 per cent of the book size came from Singapore, and 22 per cent from Hong Kong and other geographies.
DBS Bank, HSBC Bank and Standard Chartered Bank were joint book runners and lead managers to the Singapore dollar bond offering.