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TRADE FINANCE | Cesar Tordesillas, India

IDBI to raise $200M through bonds, ADB loan

IDBI Bank Ltd. plans to raise $200 million by selling bonds and is seeking partially guaranteed ADB loan.


High interest rates and a cash squeeze in the domestic market, as well as better liquidity in the dollar market, have pushed Indian firms to look overseas to raise money at a lowercost.

An ADB-guaranteed loan would push IDBI Bank's rating higher than India's sovereign rating, thus allowing the lender to avail funds at better interest rates, said the bank's executive director Melwyn Rego.

He added that the ADB may guarantee 60%-65% of the bond issue.

"Preparatory work [due diligence on the part of the ADB] is done," Mr. Rego said.

"Obviously, we will get a better pricing, but we will have to pay the ADB some guarantee fee. All in all, the cost will be lower," he added.

The maturity of the proposed bonds could be four, five, six or seven years, Mr. Rego said.

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