Exim Bank raises $1 billion via 10-year bonds

Export Import Bank of India (EXIM) Bank has broken the international bond drought from India by raising $1 billion from investors across the globe.

The government of India-backed development finance institution garnered an order book of $3.6 billion to raise 10 year money at 190 basis points above the 10- year US treasury, people familiar with the issue said. One basis point is 0.01 percentage point. It has chosen to keep $1 billion of this amount, they said.

The effective yield that Exim pays on the bond comes to about 5.50% given that the 10 year benchmark US treasury is trading at about 3.60%.


"The issue is the first one from India since March 2022 so in a way a landmark. Interest rates have risen across the board with the US Federal Reserve on a rate hiking spree which has made fundraising for entities from the emerging markets much more expensive," said a person familiar with the issue.


The Exim bond was priced at a tighter rate than the guidance of 220 basis points above the US treasury which bankers had given earlier in the day.


Hong Kong & Shanghai Banking Corp Ltd (HSBC), Japan's MUFG Bank Ltd, Barclays Plc and Standard Chartered were the bankers to the issue.


However, though the final pricing of the bond was tighter than anticipated it is still higher than the 2.25% Exim had paid for a similar $1 billion 10 year bond issue in January 2021 taking advantage of the abundant liquidity in the global banking system.


Exim is a regular in the international bond markets as it routinely raises funds to finance India's companies abroad.


In a release earlier on Tuesday global rating agency Fitch had rated the bond on par with India's BBB- rating.


"EXIM's Long-Term rating is driven by its Government Support Rating (GSR) of 'bbb-', and is the same as India's sovereign rating (BBB-/Stable). EXIM's GSR reflects Fitch's expectation of a high probability of extraordinary state support for the bank, if needed, subject to the sovereign's ability to support. Our view stems from EXIM's long-term policy role, 100% government ownership, significant protection for creditors due to access to liquidity from the authorities, if required during periods of crisis, and its status as a policy institution," Fitch had said.