Exim Bank of India Taps the Japanese Samurai Bond Market– Lowest Ever Coupon for a 10-Year JBIC Part Guaranteed Bond

Export-Import Bank of India (Exim Bank) issued 10-year bonds in the Japanese bond market (Samurai Bonds) for Japanese Yen 20 billion.  JBIC’s guarantee will cover the principal and part of the interest of privately placed Samurai bonds. Daiwa Securities, Mitsubishi UFJ Morgan Stanley Securities, Mizuho Securities and SMBC Nikko Securities were the Joint Lead Arrangers to the issue.

Samurai bonds are yen-denominated bonds issued by foreign government or company in the Tokyo bond market.

The guarantee was extended under JBIC’s Guarantee and Acquisition toward Tokyo market Enhancement (GATE) facility. JBIC supports Samurai Bond issues by foreign entities in the Tokyo bond market by providing credit enhancement. Thereby, JBIC helps expand and diversify the range of investment opportunities available to Japanese investors and help activate the Samurai bond market. This transaction was a repeat issuance for Exim Bank in the Samurai bond market after its inaugural JBIC guaranteed Samurai bond in 2011. The order book was oversubscribed by 1.5 times despite the rising uncertainties in Japanese markets following the third quarter GDP data for Japan. The final issue size was JPY 20 billion and the Bond was priced at 0.97% (YSO+27 bps) for 10 years. Exim Bank achieved the tightest spread and the lowest coupon, the first sub-one percent, in the history of the GATE facility. The previous record for the lowest coupon was held by the bonds issued by the Government of Turkey (1.05%). 

The proceeds of the Samurai bonds will be used by Exim Bank to fund Indian project exports to Sri Lanka for financing Railway Projects in Sri Lanka.

Given the low levels of yield in the Japanese market, the Japanese bond market is an attractive option for issuers from India. The renewed optimism on the economic outlook for India and also the bold quantitative easing announced by the Bank of Japan have increased the appetite for the Indian paper in the Japanese market. With the above issue, Exim Bank has been able to diversify its source of overseas funding. It has in the past raised funds in various currencies which inter-alia include Australian Dollars, Japanese Yen, Mexican Peso, Singapore Dollars, South African Rand, Swiss Francs, Turkish Lira and US Dollars.

Exim Bank has been raising foreign currency resources from the international market, which constituted approximately 46 per cent of the Bank’s borrowings as on March 31, 2014. Exim Bank’s objective is to finance and promote India's International Trade and Investment. The Bank offers to Indian companies a comprehensive range of finance, information and advisory services, supported by analysis and research, with a view to enhancing their international competitiveness. The Bank enjoys investment grade rating on par with the Indian sovereign from four international agencies viz. Baa3 from Moody’s, BBB- from Standard and Poor’s and Fitch and BBB+ from Japan Credit Rating Agency (JCRA).

Exim Bank seeks to leverage its strong financials and sovereign rating to raise foreign currency resources from international debt-capital markets through a variety of instruments and a diversified investor base, thereby enabling it to extend financial assistance to Indian exporting companies at competitive rates.