Govt. calls for proposals for new Foreign Currency Term Financing Facility
Source:FT
- Quantum unspecified but tenor could be 1 year or more; bids to be submitted by 22 Sep.
- Financing proposals sought from banks, institutional investors, investment houses
- Funds to meet expenditure approved in Annual Budget
- In mid-2020 Finance Ministry specified FCTF $ 500 m and 5 responded with proposals
The Government has called for offers for an unspecified value of Foreign Currency Term Financing Facility (FCTF) denominated in US Dollars, Euro, Chinese Renminbi and Japanese Yen.
The FCTF is expected to be raised at a fixed rate or a floating rate with a maturity period of one year or more.
The proceeds of the FCTF will be used for the purposes of financing the expenditure as approved in the Annual Budget, according to the Ministry of Finance.
Proposals should be submitted on or before 22 September. In its last FCTF exercise in mid-2020, the Finance Ministry put a value of $ 500 million.
Financing proposals have been sought from banks, institutional investors and investment houses. They should include separate proposal/s for different currencies and different options in each currency based on the structure of the FCTF such as size, cost (fixed or floating), third party expenses, tenure, repayment and the estimated lead time required to make available FCTF to the Government.
The cost of FCTF should be expressed as a percent per annum in fixed or floating rate arrangement, whilst an all-inclusive cost for each financing arrangement proposed should be indicated with the maturity period intended for the FCTF.
The Finance Ministry said repayment can be in bullet or in tranches, while interest will be paid half yearly.
Banks, institutional investors and investment houses can submit proposals on a standalone basis or collectively.
Government will have the rights to engage with one or more banks, institutional investors or investment houses for the proposed FCTF.
The names of the banks, institutional investors and investment houses that have submitted proposals will be announced on 22 September.
For its June 2020 FCTF, five responded and they were HSBC and/or its affiliates; State Bank of India, Singapore Branch; Credit Suisse AG, Singapore Branch and/or its affiliates; Industrial and Commerce Bank of China (London) PLC.; and Acuity Partners Ltd. of Sri Lanka.
