Axis Bank Secures $500 Million Offshore Loan from MUFG Amid Rising Credit Demand
Axis Bank raises $500 million in offshore loan from MUFG
The Economic Times
Image: The Economic Times
Axis Bank Ltd, India's third-largest private lender, has raised $500 million in an offshore loan from Mitsubishi UFJ Financial Group Inc. The three-year facility, priced at SOFR plus an 85-basis point margin, aims to support lending and general business needs as loan growth outpaces deposits.
- 01Axis Bank raised $500 million in an offshore loan from MUFG.
- 02The loan will be priced at SOFR plus an 85-basis point margin.
- 03Funds will be used for lending and general business purposes.
- 04Axis Bank's loans grew by 19% to ₹12.3 trillion ($130 billion) in the past year.
- 05Deposits grew only 14%, highlighting a gap in funding.
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Axis Bank Ltd, the third-largest private lender in India, has successfully secured a $500 million offshore loan from Mitsubishi UFJ Financial Group Inc. This three-year facility will be priced based on the secured overnight financing rate (SOFR) plus an 85-basis point interest margin. The funds will primarily support Axis Bank's lending activities and general business purposes. Notably, this fundraising initiative comes at a time when Indian banks are experiencing challenges, as loan growth is significantly outpacing deposit growth. For instance, Axis Bank's loans expanded by 19% to ₹12.3 trillion (approximately $130 billion) in the fiscal year ending March, while deposits increased by only 14%. The loan is currently being syndicated to a broader group of lenders, with MUFG acting as the sole mandated lead arranger and bookrunner.
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This loan will enable Axis Bank to enhance its lending capacity, potentially benefiting borrowers seeking loans. However, the disparity between loan and deposit growth may lead to increased borrowing costs for consumers.
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