IDBI Bank to raise $250 million via bonds issued in Asia

State-run IDBI Bank on Thursday said it is looking to raise $250 million in the next three months through a bond issue which will be partially guaranteed by the Asian Development Bank (ADB).

"The bonds will be privately placed but carry a partial guarantee of the ADB which reduces our fund raising costs...They will be issued in the Asian region," IDBI Executive Director Melwyn Rego told reporters in Mumbai.

IDBI Bank is already in touch with ADB and hopes to come out with the issue in the next "2-3 months", he added.

ADB will give partial guarantee to the bond issue through its credit guarantee scheme. The board of the Manila-headquartered multilateral development bank is expected to give a final clearance for the scheme soon after which IDBI Bank can go ahead with the issue, Rego said.

IDBI, which has set a target of raising $1.1 billion in FY 12 through foreign currency borrowings, is yet to appoint merchant bankers for the issue, Rego said.

The Mumbai-based bank has already raised $250 million of the targeted amount and is in the final stages of launching a Swiss Franc medium-term bond issue through which it plans to raise equivalent of $200 million, he said.

"We are yet to decide the price and have been monitoring the market closely on a daily basis. Within the next month we expect to come out with the price (and launch the issue)."

Meanwhile, reacting to the Reserve Bank of India's rate tightening on Thursday, Rego hinted at a base rate increase by IDBI, saying the ultimate objective of the apex bank in raising rates is to make credit dearer.