4. raising finance from international markets
TRANSCRIPT
Course Content - Syllabus
Ch. Title Book Reference
1 Introduction to Investment Banking ICMR Ch. 6, Subra Ch. 6, 8, 9
2 Financial Markets ICMR 3,4, Subra 1,2, Bhole 16,17,19,22
3 Merchant Banking ICMR 6, Subra 4,5,7,10, Gurusamy 1,2,4,5,6
4 Raising Finance from International Markets ICMR 7, Subra 2, 4, 5
5 Corporate Restructuring (Numericals)
6 Corporate Valuation (Numericals)
7 Financial Engineering
8 Financial Bubbles, Scams and Crisis
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Books
1. Investment Banking & Financial Services, ICMR Book
2. Investment Banking: Concepts, Analysis and Cases,
Pratap G Subramanyam
3. Capital Market Management, V. A. Avadhani, Himalaya
Publishing House
4. Merchant Banking and Financial Services, S. Gurusamy
5. Financial Institutions and Markets, L. M. Bhole, Tata
McGraw Hill
6. Manual of SEBI: Guidelines…, Nabhi Publications
7. A Manual of Merchant Banking, J. C. Verma, Bharat Law
House
Syllabus – Merchant Banking
1. Intermediaries
2. Euro-dollar Market
3. Instrument – ADR / GDR
4. FCCB
5. ECB – Regulatory Aspects
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Introduction
Figure below shows various sources of external finance and
various channels for accessing these funds.
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IMFIFCADB
Country FundsGlobal Mutual Funds
Pension FundsCommercial Banks etc.
Money Markets
Surplus Units
International Financial Markets
Capital Markets
Deficit Units
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Introduction
Prefix ‘Euro’ implies that these transactions originated in
Europe, mainly in London, but later on expanding to far
east, to Hong Kong and Singapore. At present, more than
half of the transactions in Euro markets take place outside
Europe.
During 1970s, removal of exchange controls by UK, France
and Japan gave a boost to financial markets. Application of
new technologies to financial services, institutionalization
of savings and deregulation of markets have channelized
funds from surplus units to deficit units across globe. The
markets are classified into Euro markets, American
markets and other foreign markets.
Introduction
Various instruments used to raise funds abroad include
equity, debt or hybrid instruments. Following figure shows
the types of instruments in International markets
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International Capital Markets
International Bond Market
ADRIDREDR
International Equity Market
Foreign Equity Euro Equity
Yankee BondsSamurai BondsBulldog Bonds
GDR
Foreign Bonds
Euro/DollarEuro/YenEuro/Pounds
Euro Bonds
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Introduction
Debt InstrumentsInternational bonds are classified into two categories:1. Foreign Bonds: These are the bonds floated in the domestic market denominated in domestic currency by non-resident entities. Dollar denominated bonds issued in US domestic markets by non-US companies are known as Yankee Bonds, Yen denominated bonds issued in Japanese domestic market by non-Japanese companies are known as Samurai Bonds. Pound denominated bonds issued in UK by non-UK companies are known as Bulldog Bonds.2. Eurobonds: Dollars that used outside US are called as Eurodollars. Here, the term Euro signifies a currency outside its home country.
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Introduction
The term Eurobonds thus refer to bonds issued and sold
outside the home country of the currency. For example, a
dollar denominated bond issued in the UK is a Euro
(dollar) bond. Similarly a Yen denominated bond issued in
the US is a Euro (Yen) bond.
The borrowings in the international capital markets are in
the form of Euro Loans for medium-term and long-term
funds. Syndicated loans, called as Eurocredit have a wide
network of banks participating over the globe. Typically,
syndicated loans are available for three to seven years.
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Introduction
Equity Instruments
Equity issues from developing countries, able to access
international equity markets through the issue of an
intermediate instrument called ‘Depository Receipts.’
Depository Receipt (DR) is a negotiable certificate issued
by a depository bank which represents shares issued by a
company. These shares are deposited with a local
custodian, which issues receipts against the deposit of
shares. DRs are of three types:
Global Depository Receipts (GDRs)
American Depository Receipts (ADRs)
International Depository Receipts (IDRs).
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Introduction
Quasi Instruments or Hybrid Instruments
These instruments are debt instruments for a time-frame
and are converted into equity at a option of investor or
company, after a expiry. These are warrants, Foreign
Currency Convertible Bonds (FCCBs) etc. Warrants are
issued with debt instruments as a sweeteners.
FCCBs have a fixed coupon rate with a legal payment
obligation. They have greater flexibility with the
conversion option to equity at the option of an investor.
Euro Convertible Bond is issued for investment in Europe,
which provides an option to convert to equity.
1. Intermediaries
Intermediaries in international Capital Markets include:1. Lead and co-managers: Responsibilities of a lead manager
include undertaking due diligence and preparing the offer circular, marketing the issues including arranging the road-shows. Lead manager sometimes in consultation with the issuer, can choose to invite a syndicate of investment banks to buy some of the Bonds/DRs and help sell the reminder to other investors. Co-managers are thus invited to join the deal to sell to their investor clients. Quite often there will be more than one lead managers. One of the lead manager will ‘run the books’ for the issue, involves arranging the whole issue, sending out invitation letters, allotting Bonds/DRs etc. 12 / 55
1. Intermediaries
2. Underwriters: Lead manager(s) and co-managers act as
underwriters for the issue, taking on the risk of interest
rates/markets moving against them before they have
placed Bonds/DRs. Lead manager(s) may also invite
additional investment banks to act as sub-underwriters.
Third group of investment banks may also be invited to
join the issue as members of selling group and they receive
a commission in respect of any Bonds/DRs sold. The co-
managers and the underwriters are also members of the
selling group.13 / 55
1. Intermediaries
3. Agents and Trustees: These intermediaries are involved in
the issue of bonds/convertibles. The issuer of
bonds/convertibles, in association with the lead manager,
must appoint ‘paying agents’ in different financial centers,
who will arrange for the payment of interest and principal
due to investors under the terms of the issue. These paying
agents will be banks.
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1. Intermediaries
4. Lawyers and Auditors: Lead manager will appoint a prominent firm of solicitors to draw up documentations for Bonds/DRs issue. Various draft documents will be scrutinized by lawyers, each needs to be reviewed carefully to ensure that all parties are satisfied with the wording. The issuer will also appoint legal advisors to seek advice on matters pertaining to Indian/English/American law and to comment on necessary legal documentation. Auditors or reporting accountants will become involved, supplying financial information, summaries and an audit report which will be incorporated into the offering circular. The auditors provide comfort letters to the lead manager on the financial health of the issuer. They also provide a statement of difference between the US/UK and the Indian GAAP in case of GDR issue. 15 / 55
1. Intermediaries
5. Listing Agents and Stock Exchanges: Listing agents helps
facilitating the documentation and listing process for
listing on stock exchanges and keeps on file information
regarding the issuer such as Annual Reports, Articles of
Association, the Depository Agreements etc.
Stock Exchange (Luxembourg/London/AMEX/NYSE as
the case may be) reviews the issuers’ application for listing
of the Bonds/DRs and provides comments on offering
circular prior to accepting the securities for listing.16 / 55
1. Intermediaries
6. Depository Bank: is involved only in the issue of DRs. It is responsible for issuing the actual DRs, disseminating information from the issuer to the DR-holders, paying any dividends or other distributions and facilitating the exchange of DRs into underlying shares when presented for redemption.
7. Custodian: The custodian holds the shares underlying DRs on behalf of the Depository and is responsible for collecting rupee dividends on the underlying shares and repatriation of the same to the Depository in US dollars/foreign currency.
8. Printers: are responsible for printing and delivery of the preliminary and final offering circulars as well as the DRs/Bond certificates. 17 / 55
2. Euro-dollar Market
Eurodollars are bank deposit liabilities denominated in US
dollars but not subject to US banking regulations. Banks
that offered Eurodollar deposits are located outside US,
mostly in Europe (hence the name Eurodollars) and Far
East Asia. However since 1980s, non-US residents have
been able to conduct business, free of US banking
regulations at International Banking Facilities (IBFs) in
the US.
Eurodollar deposits may be owned by individuals,
corporations or governments from anywhere in the world,
with the exception that only non-US residents can hold
deposits at IBFs. 18 / 55
2. Euro-dollar Market
Originally, dollar-denominated deposits, not subject to US banking regulations were held almost exclusively in Europe, hence named as Eurodollars. Most of these deposits are still held in Europe and in such places as the Bahamas, Bahrain, Canada, Cayman Islands, Hong Kong, Japan, Netherlands, Panamas and Singapore. Regardless of where they are held, such deposits are referred as Eurodollar deposits.
Bank I the Eurodollar market, including US IBFs, compete with banks in the US to attract dollar-denominated funds. Since the Eurodollar market is relatively free of regulation, banks in the Eurodollar market are able to operate on narrower margins or spreads between dollar borrowing and lending rates than those in the US. 19 / 55
2. Euro-dollar Market
This gives Eurodollar deposits an advantage relative to
deposits issued by banks operating under US regulation.
The Eurodollar market has grown largely as a means of
avoiding the regulatory costs involved in dollar-
denominated financial intermediation.
Size of the Eurodollar Market: Eurodollar volume is
measured as the dollar-denominated deposit liabilities of
banks located outside the US. Sum of all dollar-
denominated liabilities of banks outside US measures the
gross size of the Eurodollar market. To construct the net
size measure, deposits owned by banks in the Eurodollar
market are netted out. 20 / 55
2. Euro-dollar Market
Incentives for Development of the Eurodollar Market
Banks may avoid some US banking regulations by
accepting dollar-denominated deposits and making loans
outside the US and at US IBFs. For example, banks
located outside US do not have to hold reserves against
their dollar-denominated deposits.
Regulatory initiatives such as stricter capital standards,
higher deposit insurance premiums and more intense
supervisory scrutiny have raised the cost of depository
intermediation in the US.
Eurodollar banks hold balances with the banks in US for
clearing purpose only and avoid reserve requirements. 21 / 55
2. Euro-dollar Market
There is no deposit insurance assessment on Eurodollars. Although stricter capital standards have been imposed internationally, regulatory cost of depository in US remains higher than in the Eurodollar market. Entry into Eurodollar banking is virtually free of regulatory impediments/requirements and banks set-up in locations where tax rates are low. Foreign monetary authorities are reluctant to regulate Eurodollar business, because by doing so, business would be driven away, denying the host country income, tax revenues and jobs. Competition for Eurodollar business has been fierce, so even if US wish to regulate Eurodollar business, it would be extremely difficult to impose regulations on the entire Eurodollar market. 22 / 55
2. Euro-dollar Market
Financial Instruments in the Eurodollar Market
Majority of the money in the Eurodollar market is held in
fixed-rate Time Deposits (TDs). The maturities range from
overnight to several years. Bulk of Eurodollar TDs are
inter-bank liabilities.
Eurodollar Certificate of Deposit (CD) is an important
Eurodollar instrument. An active secondary market allows
investors to sell Eurodollar CDs before the deposits
mature.
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3. Instrument – ADR / GDR
Advent of GDRs in India has been mainly due to the balance
of payment crisis in year 1991. At that time, India did not
have enough foreign exchange to meet the requirements of
a fortnight’s imports. International institutions were not
willing to lend because of non-investment credit rating of
India. Out of compulsions, accepting the World Bank
suggestions, the government gave the permission to allow
private corporates to raise funds in international capital
markets through equity or equity related instruments. The
companies were asked to get their own foreign currencies
which led to the advent of the GDRs. 24 / 55
3. Instrument – ADR / GDR
The instrumentGDRs are essentially those instruments which possess a certain number of underlying shares in the custodial domestic bank of the company. GDR is a negotiable instrument which represents publicly traded local-currency-equity share.By the law, a GDR is any instrument in the form of a depository receipt or certificate created by the Overseas Depository Bank outside India and issued to non-resident investors against the issue of ordinary shares or foreign currency convertible bonds of the issuing company. Usually, GDR is denominated in US dollars whereas underlying shares are in local currency of the issuer. 25 / 55
3. Instrument – ADR / GDR
GDRs may be, at the request of an investor, converted into
equity shares by cancellation of them. GDRs are
considered as common equity of the issuing company and
are entitled to dividends and voting rights. The company
transacts with only one entity – the Overseas Depository.
Issuance of GDR
Following activities are involved during issuance of GDRs.
1. Shareholder approval needed
2. Appointment of Lead Manager
3. Finalization of Issue Structure
The company should obtain the final approval from the
government. 26 / 55
3. Instrument – ADR / GDR
Company should furnish the information about the entities
involved in the GDR issue and the following parameters to
the government. Lead Manager and Co-lead Manager Currency Issue Price (approximate range in case of GDR) Form and Denomination Negative pledge provisions Taxation Commissions Reimbursable expenses Governing Laws 27 / 55
3. Instrument – ADR / GDR
Overseas Depository Institution Indian Custodian Issue Structure and denomination of underlying shares Issue amount Green Shoe option (right to sell more shares) Warrants attached, if any Listing modalities Selling commission and Underwriting commission Legal expenses, printing expenses, depository fees etc. Taxation procedure
The government will give a final approval for the issue, if
satisfied. 28 / 55
3. Instrument – ADR / GDR
The Documentation
Documentation for Euro equities is a complex and
elaborate process of GDR issue. A typical Euro-issue
requires following main documents Prospectus Depository agreement Custodian agreement Subscription agreement Trust deed Paying and conversion agency agreement Underwriting agreement and Listing agreement 29 / 55
3. Instrument – ADR / GDR
The Launch
Two approaches for launching are Euro-equity
Syndication and Segmented Syndication. Euro-equity
syndication attempts to group together the placement
strengths of the intermediaries. Segmented syndication
forms a geographically targeted syndicate structure to
achieve broader distribution of paper.
Marketing
A judicious mix of financials and marketing help better.
Most of the marketing activities are handled by the lead
manager in consonance with the advertising agencies.
Road show form a predominant facet of the launch of any
GDR.30 / 55
3. Instrument – ADR / GDR
These are face to face presentations with fund managers
and analysts. These are normally conducted at the
financial centers like London, New York, Boston, Los
Angeles, Paris, Geneva, Hong Kong etc. The price that is
preferred is noted by the book-runner during
presentations / road shows and the eventual price, in favor
of the fund manager is finalized.
Pricing and Closing: The price is determined after the
underwriters’ response and the response may be drawn.
The final price is determined after the book runner closes
the books after the road shows. A tombstone
advertisement will be issued and GDRs will be listed. 31 / 55
3. Instrument – ADR / GDR
Costs
The cost incurred by the company is proportional to the
issue size. The lead manager takes the lion’s share in the
issue expenses. Cost incurred on marketing is fast
increasing. Other expenses include printing costs,
accounting fees, listing fees, road show expenses etc.
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3. Instrument – ADR / GDR
ADRs
ADR is a dollar denominated negotiable certificate, it
represents a non-US company’s publicly traded equity. It
was devised in late 1920s to help American investors to
invest in overseas securities and to assist non-US
companies to have their stock traded in the American
market. ADRs are divided into 3 levels based on the
regulation and privilege of each company’s issue.
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3. Instrument – ADR / GDR
1. ADR Level-I: It is often the first step for an issuer into the US public equity market. Issuer can enlarge the market for existing shares and thus diversify the investor base. In this instrument only minimum disclosure is required to the SEC and the issuer need not comply with the US GAAP. This type of instrument is traded in the US OTC market. The issuer is not allowed to raise fresh capital or list on any one of the national stock exchanges.
2. ADR Level-II: Through this level, company can enlarge the investor base for existing shares to a greater extent. However, significant disclosures have to be made to SEC. The company is allowed to list in the American Stock Exchange (AMEX) or New York Stock Exchange (NYSE).
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3. Instrument – ADR / GDR
1. ADR Level-III: This level of ADR is used for raising fresh
capital through public offering in the US Capital Markets.
The company has to be registered with the SEC and
comply with the listing requirements of AMEX/NYSE
while following the US GAAP.
Intermediaries for ADR issue perform the same work as like
GDR issue. Additionally, the intermediaries involved will
liaison with the QIBs for investing in ADRs. Some of the
well known intermediaries for ADRs/GDRs are Merrill
Lynch, Goldman Sachs, JP Morgan etc. The regulatory
framework for the ADRs is provided by SEC.
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4. FCCB
A Foreign Currency Convertible Bond (FCCB) is a convertible bond issued in a foreign currency i.e. different than the domestic currency. In other words, it is used to raise the finance in foreign currency. FCCB is a hybrid instrument between bond and equity. It acts like a bond by making regular coupon and principal payments and also give the option to convert into the stock.
Indian companies have been using FCCBs as a major source of finance-raising tool for meeting its capex requirement at competitive rates. The quality of Indian paper has also gained widespread International acceptability. FCCB are also referred as FCCN (Foreign Currency Convertible Notes) by some issuers. 36 / 55
4. FCCB
The investors receive the guaranteed payments on the bond
and are also able to take advantage of any large price
appreciation in the company's stock. Bondholders take
advantage of this appreciation by means warrants
attached to the bonds, which are activated when the price
of the stock reaches a certain point. Due to the equity side
of the bond, which adds value, the coupon payments on
the bond are lower for the company, thereby reducing its
debt-financing costs. So these bonds are beneficial to both,
the issuer and the investors. The issuers of FCCBs are
companies, banks, governments and other sovereign
entities may issue bonds in foreign currencies. 37 / 55
4. FCCB
Features of FCCBs FCCB is issued as interest bearing or zero coupon bonds
and are convertible during their tenure into equity. FCCB issues have call and put option to suit the structure
of the Bond. A call option entitles the issuer to call the loan
and make an early redemption. On the other hand, a put
option entitles the lender to exercise the option to convert
the FCCB into equity. FCCB are generally issued by companies, which have high
promoter shareholding and hence do not perceive any risk
of losing management control even after exercise of
conversion option. 38 / 55
4. FCCB
For FCCB issue, automatic route is available to real sector
i.e. industrial sector, specially infrastructure sector in
India, while all other sectors have to take RBI approval. In India, FCCB are treated as Foreign Direct Investment
(FDI) and FCCB guidelines are liberalized from time to
time to give impetus to infrastructure development and
expansion plans of corporate India. In India, FCCB are issued in accordance with guidelines
and regulations framed under FEMA Act by the RBI and
schemes notified by the Ministry of Finance and must be
meeting the requirements of the ECB guidelines.39 / 55
4. FCCB
Yield to Maturity (YTM) in case of FCCBs normally
ranges from 2 % to 7 %. The foreign holders of FCCBs can trade the FCCB in part
or in full i.e. the holder can sell the debt part while holding
the option; or vice versa. While a credit rating of FCCB is not mandatory, since
they are mostly issued by top corporate having excellent
track record. However, rating definitely helps to price the
coupons competitively. FCCB carries fewer covenants (agreements) as compared
to a syndicated loans or debentures, hence these are more
convenient to raise funds. 40 / 55
4. FCCB
FCCB can be unsecured or secured, but in practice most
of the FCCB issued in India are unsecured (since they are
issued by top companies having excellent track record.) FCCBs shall be denominated in any freely convertible
foreign currency and the ordinary shares of issuing
company shall be in Indian rupees. FCCB issue proceeds need to confirm to ECB end use
requirements. In addition, 25% of the FCCB proceeds can
be used for general corporate restructuring. FCCB are generally listed to improve liquidity. Indian
issuer have listed FCCBs at Luxembourg Stock Exchange
and Singapore Stock Exchange. 41 / 55
4. FCCB
Advantages to issuers
It is a source of low-cost debt as coupon rates on the bond
are lower than the average lending rates, since it has a
convertible option
It may appear to be more stable and predictable than their
domestic currency
It gives issuers the ability to access investment capital
available in foreign markets
Companies can use the process to break into foreign
markets42 / 55
4. FCCB
The bond acts like both a debt and equity instrument.
Like bonds it makes regular coupon and principal
payments, but these bonds also give the bondholder the
option to convert the bond into stock It is a low cost debt as the interest rates given to FCC
Bonds are normally 30-50 percent lower than the market
rate because of its equity component Conversion of bonds into stocks takes place at a premium
price to market price. Conversion price is fixed when the bond is issued. So,
lower dilution of the company stocks43 / 55
4. FCCB
Benefits to investors
FCCBs bring the advantage of capital protection, by the
guaranteed payments on the bond, like any other debt
instrument and the chance on an appreciation in the price
of the company’s shares through conversion.
Redeemable at maturity if not converted
Easily marketable as investors enjoys option of conversion
in to equity if resulting to capital appreciation
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4. FCCB
Disadvantages of FCCBs to the investors and companies Exchange risk is more in FCCBs as interest on bond
would be payable in foreign currency. Thus companies with low debt equity ratios, large Forex earnings potential only opted for FCCBs
FCCB means creation of more debt and a Forex outgo in terms of interest which is in foreign exchange
In case of FCCB, the interest rate is low (around 3 to 4%) but there is exchange risk on interest as well as principal if the bonds are not converted in to equity
If the stock price drops, investors will not go for conversion but redemption. So, companies have to refinance to fulfill the redemption promise which can hit earnings
It will remain as debt in the balance sheet until conversion.
4. FCCB
Taxation on FCCBs Until the conversion option is exercised, all the interest
payments on the FCCB is subject to deduction of tax at
source at the rate of 10% Tax exercised on dividend on the converted portion of the
FCCB is subject to tax deduction at source at the rate of
10% If FCCB is converted into shares it will not give rise to any
capital gains liable to income-tax in India If FCCB is transferred by a non-resident investor to
another non-resident investor it shall not give rise to any
capital gains liable to tax in India. 46 / 55
4. FCCB
Some of the Indian companies that raised FCCBs included Tata Motors Tata Chemicals Tata Power Tata Teleservices Jaiprakash Associates Bharat Forge Ballarpur Industries Reliance Energy Indian Hotels Bharti Tele Ashok Leyland and so on... 47 / 55
4. FCCB
Conclusion
FCCB is a good source of raising funds with minimum cost.
The procedural aspect is comparatively simple. The
company can raise loan without creating security on
assets. That is why most of the companies are opting to go
for FCCB, though the exchange risk is there.
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5. ECB – Regulatory Aspects
External Commercial Borrowings (ECB) from the lenders and investors outside India, are permitted by the GOI as a source of finance for Indian companies for expansion of existing capacities and for fresh investments. ECBs occupy very important position as a source of funds for the companies. ECBs are defined to include commercial bank loans, buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies, foreign collaborators, foreign-equity holders, international capital markets and commercial borrowings from the private sector window of Multilateral Financial Institutions. However, offers from unrecognized sources will not be entertained. 49 / 55
5. ECB – Regulatory Aspects
Main objective of ECB guidelines is to
Keep borrowing maturities long
Keep borrowing costs low
Encourage infrastructure and
Export sector financing.
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5. ECB – Regulatory Aspects
ECB Cap
With a view to manage the country’s external debt
prudently, the Finance Ministry sets an annual cap on the
total ECBs that Indian companies can access in a year.
ECB cap would be only in years of excess demand.
Government also puts restrictions on the maturity of the
borrowings to discourages very short term borrowings.
51 / 55
5. ECB – Regulatory Aspects
ECB Definition of Average Maturity
According to the Finance Ministry, ‘average maturity of
ECB is the weighted average of all disbursements taking
each disbursement individually and its period of retention.
52 / 55
5. ECB – Regulatory Aspects
ECB Guidelines Removal of the end-use restriction for corporate
investments in industrial sector especially infrastructure.
Money has to be parked abroad unless actually required.
Usual restrictions on ECB for investment in capital
market or in the real estate will, however continue. Eligibility: All corporates except banks, NBFCs and
financial institutions shall be eligible ECB borrowers.
However banks and financial institutions will be permitted
to the extent of their investments in the textile and steel
sector restructuring.53 / 55
5. ECB – Regulatory Aspects
Interest Rate Spreads: All ECBs shall be subject to the
following maximum spreads over six months LIBOR, for
the respective currency as:
◦ Average maturity of 3-5 years: 200 basis points
◦ More than 5 years of average maturity: 350 basis points Guarantee: Banks, FIs, NBFCs will not be able to provide
guarantee / letter of comfort etc. Procedure: All ECBs satisfying above criteria will be
under the auto route up to $20 million for ECBs between
3-5 years maturity and up to $500 million for ECBs
having maturity of more than 5 years. Other cases will be
decided by an Empowered Committee of the RBI. 54 / 55
5. ECB – Regulatory Aspects
End-uses of ECB for working capital, general corporate
purpose and repayment of existing Rupee loans are not
permitted. Maximum amount of ECB which can be raised by an
eligible borrower under the automatic route is $500
million or equivalent during a financial year. Compliance with ECB Guidelines: Primary responsibility
of a concerned borrower is to ensure that ECB raised /
utilized is as per RBI instructions and ECB Guidelines.
Any contradictions will be viewed seriously and may invite
penal action.
***** 55 / 55