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Indian Overseas Bank may raise $500 mn next year

Indian Overseas Bank may raise $500 mn next year
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First Published: Wed, Dec 14 2011. 07 19 PM IST

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File photo
Updated: Wed, Dec 14 2011. 07 19 PM IST
Mumbai: State-run Indian Overseas Bank (IOB) may look at borrowing $500 million in the overseas market next year to meet dollar demand from Indian companies, its chief M. Narendra told Reuters on Wednesday.
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“We may, at an appropriate time, look at medium-term notes for $500 million next year, when the market is right,” he said over the telephone. “This is to meet credit growth in international market, (for) corporates who want external commercial borrowings.”
“There are other markets like Chinese, Japanese where we can also raise money. So, all options can be looked at. Not immediately, but next year,” he added.
Last month, another state-run lender IDBI Bank became the first local lender to raise funds in offshore yuan in Hong Kong, signaling a new set of borrowers to enter the growing bond market.
The Reserve Bank of India (RBI), in November, eased overseas borrowing rules for corporates and directed that funds raised abroad meant for rupee expenditure in India would have to be brought in immediately, in a move to boost inflow of foreign currency.
Indian companies have been delaying investment plans as rising interest rates in a slowing economy make projects expensive. The policy interest rates in the country are at their highest since the global financial crisis in 2008.
Several companies have been scrambling to raise cheap overseas fund, mainly to pay off expensive rupee-denominated debt or to redeem convertible bonds.
“Requests for external commercial borrowings (ECBs) are coming, a lot of them. We are committing some ECBs but not in a big way,” Narendra said, adding international banks are also dollar-strapped.
The rupee has fallen nearly 19% from its 2011 peak in late July and briefly hit a fresh low of 54 to the dollar on Wednesday, prompting speculation that the RBI may step into the market to limit the currency’s fall.
Shares of IOB, valued by the market at over $1 billion, were up 0.17% on Wednesday in a Mumbai stock market that ended down 0.76%.
They are down nearly 41% in 2011, underperforming the 26.6% fall in the BSE bank index, since January.
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First Published: Wed, Dec 14 2011. 07 19 PM IST