Exim Bank to raise $3 bn through bonds in FY22, focus more on socially responsible bonds

Export-Import (Exim) Bank of India is looking to raise up to USD 3 billion through bond issues in the 2021-22 and will be looking to raise more funds under the socially responsible notes category in the next fiscal, a top official has said.

The pandemic is a "blip" which will slow down balance sheet expansion as the global trade slows down and developmental projects financed by the policy bank also take a backseat, its managing director David Rasquinha told PTI.

"In the remaining part of FY21, we will not be raising much of bonds. But the next fiscal year, we will need to raise USD 2.5-3 billion," the MD said.

He said the bank's refinancing requirements alone go to over USD 2 billion per year, while the rest is funding against the fresh on-lending that it does.

A bulk of the issuances will be in the global market linked to US dollar, the most convertible currency, he said, adding that 80 per cent of its balancesheet is in USD at present.

Having successfully tested waters by raising USD 50 million in a socially responsible bond for the Mekong Region, the bank will be launching more such issuances of bigger ticket sizes in the new fiscal, he said.

Rasquinha said it is possible for the bank to offer projects which qualify under the environment, social and governance (ESG) theme, which is preferred by many investors globally given the shift in practices, because of the work done on the developmental work by the bank.

"This (the USD 50 million) was a proof of concept. Now that it is successful, we will scale up. There will be bigger deals definitely. We are talking to a couple of parties,” he said, adding that fundraising under the socially responsible bonds will be both on a bilateral basis and also multilateral ones as the ticket sizes go up.

He, however, conceded that the cost of documentation is a problem with such fund raising because the social impact of the project has to be documented and presented before investors.

Meanwhile, when asked about the impact of India being put under the “currency manipulators” list by the US, he said it will not have any effect as the investors know that these are “mechanical calculations” and “political compulsions” also result in the calls.

On the reverses of the Covid-19 pandemic, he said the impact is “inevitable” for an institution like Exim Bank but added that things like slowdown in balancesheet expansion are only a “blip” in the long term story for the lender.

The asset quality has “been good” so far for the bank, he said, adding that it is allowed to extend moratoriums and also restructuring in the case of select accounts as per the guidelines issued by the RBI in the post-pandemic scenario.

There is no need to provide aggressively against advances either, he said, adding that the challenges being faced by borrowers are temporary ones which can be classified as a “liquidity issue” and not a “solvency issue”.

He said the bank has already received Rs 1,300 crore which the government had promised to infuse during the fiscal and will be looking at further capital raising in the new fiscal.

“There will be more need. We want capital and the government has been very understanding. We face a leverage constraint. We can borrow on the net owned funds. I need growth capital. I am sure it will continue,” he said.