Asian countries seem to be a happy hunting ground for raising resources for Export-Import Bank of India. After tapping Uridashi bonds (Japan) and Panda bonds (China), India’ export credit agency is eyeing issuance of Formosa bonds in Taiwan.

The move to tap Formosa bonds comes in the backdrop of China imposing controls to stem capital outflows. China reportedly saw outflows of about $309 billion in 2016.

David Rasquinha, Managing Director (Additional Charge), Exim Bank, said, “The Formosa bond market is something which is interesting. The Taiwanese companies are very liquid and investors in Taiwan are looking for investment opportunities.

“We did an investor update in April-May 2016 in Taipei. But we would need to once again talk to investors. So, it is early days yet.”

So far, the bank has raised foreign currency resources in diverse currencies including Australian dollars, euros, Japanese yen, Mexican peso, Offshore renminbi, Singapore dollars, South African rand, Swiss francs, Turkish lira and US dollars.

While the Panda bond market in China is a long-term focus for Exim Bank, Rasquinha said “right now the regulations in China are not favourable in the sense that if you raise money in yuan, you may not be able to take it out at this point in time because they have their own restrictions out there.”

When it comes to the Japanese investors’ appetite for Indian paper, the Exim Bank chief observed that with interest rates so low in Japan, there is no alternative but for savers there to look overseas. “Retaining funds in yen and investing them at very low or negative rates of interest is not going to help anyone. So, I would say Mrs Watanabe (the archetypal Japanese household investor) will continue to be interested in investing overseas,” he said.

Global scan

Rasquinha said Exim Bank is constantly scanning the global markets to mop up resources at lower interest rates. Exim Bank had raised $1 billion in July 2016 via maiden “144A” issuance under global medium term note programme.

“It (144A issuance) was the finest rate (187 basis points over the 10-year US Treasury) got by anybody out of India and the largest subscription from the US, which is the most demanding and deepest capital market…

“The book was oversubscribed by almost 2.5 times at that time. We would definitely be eyeing that very seriously in the next financial year,” he said.

During the current financial year, the export credit agency raised about $2.5 billion as against $1.8 billion in the previous financial year.

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