BoB mops up $750 mn from overseas bond sale

Bank of Baroda, country's second largest public sector lender, has raised $750 million through an overseas dollar denominated bond issue.

 

Domestic corporates successfully raised a whopping $16 billion last year in forex debt from the international markets.

 

The US dollar bond sale is part of the city-based state- run lender's medium-term notes programme and was priced at 325 bps over the US treasury, offering an effective coupon of 4.875% to investors.

 

The state-owned lender, which could not be contacted, had last tapped the international debt markets in February 2011, raising $500 million under its medium term note (MTN) programme.

 

According to one of the merchant bankers, who wished not to be named, the bank sold the senior unsecured debt (REGS notes) in the international markets yesterday and the issue received $4.4 billion worth offers.

 

"BoB sold $750 million 144A/REG S 5.5-year new issue a priced at US treasury plus 225 basis points, offering an effective yield of 4.875% per annum," the i-banker told PTI today.

 

He said this is largest issue out of the country this year and one of the cheapest dollar bonds sales this year from Asia but with the highest reduction (35 bps) from final guidance of 360 bps over the US treasury bills (T-bills).

 

The 144 A notes means resident American investors cannot participate in the issue but non-residents can and also cannot be registered with the US Securities and Exchange Commission.

 

The order book touched $4.4 billion from 313 accounts from Asia 52 (per cent), Europe (per cent), and the US 18%, he added.

 

By investor type, the investors included 42% banks, fund managers 40%, corporates/others 12% and private banks 6%, he said.

 

The issue is rated 'BBB-' by Fitch earlier this month.

 

The funds are expected to be used for the bank's international operations, according to the merchant banker.

 

Earlier, ICICI Bank raised $750 million in November from foreign markets through a 5.5-year dollar bond issue at 4.8% and HDFC Bank in October raising $500 million.

 

Indian Railway Finance Corporation had recently announced a $600 million overseas bond issue. Bharti Airtel, which had earlier raised 750 million euros last December, reopened the issue and mopped up an additional 250 million euros this Monday.

 

In the last calendar, domestic corporates and financial institutions had mopped up a record $16 billion, mostly US dollar money in 2013, over a billion in euros and an equal amount in Singapore and Australian dollar apart from a couple of billions in Chinese yuan.