Home / Industry / Banking /  IDBI Bank to raise $5 billion through MTN route

Mumbai: IDBI Bank Ltd plans to raise $5 billion by selling medium-term notes (MTN), more than its earlier target, as it expects demand for foreign currency borrowings by Indian companies to increase.

The bank will soon approach its board for permission to increase the size of its bond sale programme, said N.S. Venkatesh, head of treasury at IDBI Bank. It has so far raised $2.8 billion out of its earlier plan of selling $3.5 billion of MTN.

“We expect demand for foreign exchange lending will go up. Our MTN programme is listed in Singapore and will continue to be there," Venkatesh said.

The proceeds of these issues are lent to Indian firms and non-resident Indians abroad.

Earlier on Monday, Fitch Ratings assigned IDBI Bank’s MTN programme and various tranches of its outstanding senior unsecured notes a rating of “BBB-" on par with the sovereign rating.

The rating reflects Fitch’s “expectation that the government of India would continue to have a high propensity to extend the bank extraordinary support, should there be a need. This expectation is based on IDBI’s systemic importance, given its share in system assets and deposits (above 3%), pan-India presence, the government’s majority ownership of the bank (71.7% as at end-March 2013), and IDBI’s role as a strategic shareholder in developing various key institutions (for example, in ARCIL, India’s first asset reconstruction firm)," Fitch said in an emailed statement.

Fitch, however, noted that IDBI Bank’s total stressed assets (gross non-performing assets plus performing restructured loans) had risen to around 12.4% in the first half of the current fiscal from 9% at the end of fiscal 2013.

“Given the bank’s asset concentration, Fitch expects asset quality pressures to continue, particularly on the restructured assets front. However, the 18 billion ( 1,800 crore) capital injection expected by end of FY14 should help the bank to achieve a tier-i capital ratio of above 8% (FY13: 7.7%)," Fitch said.

IDBI Bank shares fell 1.04% to 62.10 on BSE, while the exchange’s benchmark Sensex shed 0.27% to 20,659.52 points.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout