Bank of India's foreign bond issue subscribed 5 times

Government-owned Bank of India's $500 million bond issue opened in markets abroad today and got subscriptions five times the offer size.

V R Iyer, chairperson and managing director, said the bond was for 5.5 years and the indicative yield was US Treasury plus 2.8 per cent. Asked about room for increasing the issue size, she said the response and requirement would be reviewed.

Moody's affirmed supported deposit ratings of Baa3/P-3 for the issue. It also assigned a Baa3 rating to a newly proposed dollar-denominated senior unsecured issue for raising up to $1 billion. The money is being raised via the London branch and these bonds would be listed on the Singapore exchange.

Moody's also affirmed the bank's standalone bank financial strength rating of D but revised the outlook to negative. This indicates pressure from the persistently difficult economic environment in India. It reflects the risk of further asset quality deterioration and weak shock-absorbing buffers compared to similarly-rated peers.

The stable outlook on the supported ratings reflects the high probability of support from the government (majority shareholder) expected in times of stress.