Yes Bank set to enter offshore bond market with 5-year dollar bond

Mumbai: Private sector lender Yes Bank Ltd is gearing up to make a debut in the offshore bond market with a five-year dollar bond. The bank is looking to raise $300-500 million before March 2017 to avail cheaper funding for its offshore lending branch at GIFT City in Gandhinagar, Gujarat, said two people from the bank.

The offshore branch is meant to function as a foreign branch of the domestic bank and lend in foreign currency. GIFT City is India’s first international finance centre. The fund-raising is aimed at raising cheaper funds that would help Yes Bank lend to companies in a more efficient manner.

“We can mobilise cost-effective funds rather than predicate our offshore lending model on borrowing from foreign banks through correspondent banking tie-up and then onlend it which makes it inefficient to be meaningful for pre-shipment finance and post-shipment finance, pharma companies, export-oriented companies where we were not competitive till six to nine months ago,” said Rana Kapoor, managing director and chief executive officer of the bank, in an interview on Thursday.

While the timing of this fund-raising has not been finalised yet, this would allow the bank to provide adequate funding to Indian companies looking to borrow in dollars and their international subsidiaries and joint ventures, a senior official of the bank said, on the condition of anonymity.

“That branch in Gandhinagar is doing rather well for us. (It) crossed half a billion (dollars) in assets,” Kapoor said.

In June, the bank’s shareholders approved its plan to raise up to $1 billion in foreign markets by issuance of new shares through qualified institutional placement (QIP), American depository receipts (ADRs) and global depository receipts (GDRs). The shareholder approval is valid till June 2017.

Apart from this, the shareholders also approved the bank’s plan to raise domestic or international funds to the tune of Rs.10,000 crore through means such as non-convertible debentures, medium-term notes and bonds.

Last month, the Reserve Bank of India (RBI) allowed banks to raise rupee funds from foreign investors through the issuance of masala bonds.

Yes Bank