IDBI Bank ties up with ADB to raise $200 mn through bonds
The state-run lender's credit rating is same as the Indian sovereign and a guarantee from ADB will take it a bit higher than the Indian sovereign and hence it will get funds at lower rate, Rego said.
In order to access finance in a cheaper way, state-run IDBI Bank has tied up with Asian Development Bank (ADB) to partly guarantee a $200 million fund raising through bonds.
The bank already has all the necessary tie-ups in place and is waiting for the right moment to hit the market to raise the money, IDBI Bank Executive Director Melwyn Rego told reporters.
"We will get a better pricing. But we will have to pay ADB some guarantee fee. All in all the cost will still be lower," he said, stressing the fund raising will be first such deal by any Indian financial institution.
The state-run lender's credit rating is same as the Indian sovereign and a guarantee from ADB will take it a bit higher than the Indian sovereign and hence it will get funds at lower rate, Rego said.
Under the deal, the Manila-headquartered regional development bank will guarantee up to 65 per cent of the IDBI's fund raising. The deal is outside of the bank's $1.5 billion medium term note (MTN) programme, he said.
IDBI Bank has already raised $452 million from the MTN window and will be filing a notice for extending the programme by a year at the Singapore Stock Exchange this week.
Meanwhile, the bank has launched a portal for trading in Government securities, touted as the country's first such online facility for retail investors whose participation in the bond market is very low.
'IDBI Samriddhi G-Sec Portal' is aimed at letting retail investors, who account for less than 1 per cent of Government securities market, participate in the India growth story by subscribing to Government bonds, Rego said.
The facility is aimed at high net worth individuals and other bodies like temple trusts, he said, adding anybody with a demat account can participate.
The investor will be buying into the securities already purchased by the bank and other details like the yield on the security and amount to be paid will be calculated as per the going rate, Rego said, adding the quotes will be updated three times a day.