IDBI Bank has struck a deal with ICICI Bank to provide credit protection to the country's largest private lender for bonds worth Rs 10 crore.
IDBI Bank would be the first public sector bank to underwrite a credit default swap (CDS) transaction in the domestic market to manage credit risks linked with corporate bonds. ICICI Bank has taken CDS cover for two portfolios of Regional Electric Corporation and Indian Railway Finance Corporation, a treasury executive with a public sector bank said. Commenting on the deal, Melwyn Rego, executive director, IDBI Bank, said, “This would help widen the domestic corporate bond market.”