Companies & Sectors
IDBI Bank to raise $500 million from overseas in next six month

The issue would be made under IDBI Bank's $1.5 billion MTN programme listed on the Singapore Stock Exchange, out of which the lender had already raised $1 billion

New Delhi: State-run IDBI Bank has said that it plans to raise another $500 million (about Rs2,700 crore) through bonds to fund its overseas business growth, reports PTI.


"We will be raising $500 million from foreign currency bonds by March 2013," Melwyn Rego, Executive Director of IDBI Bank told PTI.


The issue would be made under the $1.5 billion medium term note (MTN) programme listed on the Singapore Stock Exchange.


Of the total limit, the bank has raised $1 billion in two tranches of $500 million each.


Last week, the bank raised $500 million from foreign currency bonds.


The transaction received an overwhelming response and the issue was oversubscribed by nine times, Rego said.


The long-term notes denominated in US dollar were issued by the Dubai International Financial Centre (DIFC) branch of IDBI Bank.


The final coupon was 4.375% (fixed), he said, adding, the transaction attracted interest from a diversified range of foreign investors including asset managers and banks.


Around 68% of the allocation was made to Asian investors, 23% to European investors and 9% to investors in the Middle East, he said.


The bank also plans to double its MTN programme to $3 billion.


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Economy & Nation Exclusive
Rapid reforms in government policy not good for economy, says BNP Paribas

Political turmoil is not the only consequence of rapid reforms in government policy. It is not good for the economy or for corporate earnings, says the BNP Paribas equities research report

The UPA (United Progressive Alliance) has lost a key ally in the coalition, the TMC (Trinamool Congress), as an immediate consequence of rapid reforms in government policy last week. But BNP Paribas equities research in its report warns that there is more trouble to face for the country, the economy and the corporate sector in the light of the hasty approach of the government.


  • Big bang measures: good for sentiment but not immediately relevant for earnings or the economy

The government’s recently-announced reform measures—increase in diesel price, FDI in multi-brand retail, etc—reduce the “tail risks” to the Indian market. Apart from a 0.15% decline in fiscal deficit of GDP (gross domestic product) for FY13 and some upward pressure on the rupee, BNP Paribas sees limited near-term impact of the government measures.


  • Further “nuts and bolts” measures are required

According to BNP Paribas, the need of the hour is to kick-start the investment cycle. Many projects in the electricity, metals and chemicals (refinery) sectors are stalled because of issues related to environment clearance, land acquisition or fuel supply. The proposed National Investment Board, headed by the prime minister, to fast-track projects above a certain threshold (tentatively Rs10 billion), could help speed project execution.


  • Some short-term weakness possible in certain stocks

While the recent measures are sentiment positive, BNP Paribas believes that their impact on corporate fundamentals will be limited. The recent rally of some stocks was driven both by “risk on” sentiment post easing by G3 central banks and positive sentiment after the flurry of reform announcements. The rally is overdone and provides some profit booking opportunities. BNP Paribas analysts highlight the rallies in JSPL (Jindal Steel Power), RIL (Reliance Industries), DLF, SBI (State Bank of India) and BHEL might lead to short term weakness. Two-wheeler stocks, particularly Hero MotoCorp, are also suffering from low retail demand and high inventory, which the market seems to have overlooked.


  • BNP Paribas sticks to its year-end Sensex target of 18,500

India has been one of the best performing markets over the past few weeks – outperforming regional peers and the benchmark MSCI AxJ and EM indices. After the recent run-up, the Sensex 12-month forward P/E (price-earnings) valuation is at 14.1 times—just 7% below its long-term average of 15.2 times. This will be a near-term ceiling given ongoing deleveraging pressures. As such, BNP Paribas retains its year-end Sensex target of 18,500, derived using justified P/BV (price-to-book value ratio). At the BNP Paribas target, the Sensex would trade at a 1-year forward P/BV of 2.2 times and PE of 13.7 times.


BNP Paribas sums it up as “We are not worried about government stability as a consequence of this development. The numbers are simply too overwhelmingly in favour of the ruling coalition.” Still the advice to the government would be “slow and steady wins the race” even in reforms in government policy.




4 years ago

Rapid fire Reforms? !!

Policy Paralysis to Policy Delirium !!

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