BoI revives overseas bond issue

With easing of spreads in global capital markets, Bank of India (BoI) is back with its foreign currency bond offering to raise over $300 million (Rs 1,380 crore) for business growth.

In February, the public sector bank had withdrawn the offering as spreads tightened after the market was gripped with fears that Greece, Portugal and Spain might default on their sovereign debt.

BoI plans to sell 5-and-½ year bonds under the medium-term note (MTN) programme at around 245 basis points (bps) over comparable US bands. The issue had already opened in London for subscription, market sources said. Spreads have eased to 225-230 bps from a high of 250-260 bps.

The bank had hired Barclays Capital, Citigroup, Deutsche Bank, HSBC and RBS for the deal, which could be priced as early as on Wednesday, subject to market conditions, said the sources.

The bank is looking at a “benchmark-size” issuance between $300 million and $500 million. The price guidance is tighter than that given last time when it was looking to sell dollar bonds at a spread over mid-swaps.