PNB seeks US$1bn dollar loan with Mashreq and CTBC backing

Punjab National Bank is reported to be raising a five-year US$1bn loan underwritten by Mashreq and CTBC Bank, in one of the larger recent cross-border funding exercises by an Indian public-sector lender.

The US dollar facility is expected to be syndicated to a wider group of international financial institutions after the initial underwriting. Mashreq is based in the United Arab Emirates, while CTBC is headquartered in Taiwan, giving the transaction a lender group spanning South Asia, the Middle East and East Asia.

The proceeds are intended for on-lending connected with foreign currency non-resident, or FCNR, deposits. These accounts allow eligible non-resident customers to maintain term deposits in foreign currencies, creating a corresponding requirement for banks to manage foreign-currency assets, liabilities and liquidity.

An underwritten syndication gives a borrower greater funding certainty at launch because the initial banks commit to arrange the facility before distributing portions of the exposure to other lenders. The final allocation can broaden the creditor group and reduce the amount retained by each underwriting bank.

The reported transaction would add medium-term dollar liquidity to PNB’s balance sheet at a time when Indian banks are expanding overseas borrowing and foreign-currency lending. It also provides a test of international lender appetite for Indian public-sector bank risk across a full five-year maturity.

Pricing, fees, drawdown conditions and the final syndicate have not been disclosed. It is also unclear whether the US$1bn will be advanced as a single tranche or divided between separate drawings. The transaction should therefore be described as being raised or syndicated, rather than as a completed financing.

The involvement of Mashreq and CTBC illustrates the increasingly cross-regional nature of Asian bank funding. Middle Eastern and East Asian institutions have become important sources of syndicated liquidity for borrowers seeking alternatives to reliance on their domestic deposit bases or public bond markets.

Neither PNB nor the two underwriting banks had published a matching announcement on their public news channels at the research cut-off. The facility has been reported by The Economic Times, citing people aware of the transaction, and the status should remain clearly attributed until one of the participating institutions confirms completion.