IDBI Bank to raise $500 mn through MTN issue this week

Taking the benefit of softening of bond yields in the global markets, IDBI Bank plans to raise about $500 million this week under its Medium Term Notes (MTN) programme.

The bank is looking to issue dollar-denominated bonds this week. The tenure will depend on the feedback and appetite of investors, said an official associated with the bond offering.

Rating agency Moody's has assigned a Baa3 rating to proposed issuance of long-term senior unsecured notes under its $1.5 billion Medium Term Note (GMTN) programme. These notes will be denominated in dollars and issued by the Dubai International Financial Centre (DIFC) branch, Dubai of IDBI Bank.

BOND  BUSINESS

• IDBI is looking to issue US dollar denominated bonds this week
• Rating agency Moody's has assigned a Baa3 rating to proposed issuance of long-term senior unsecured notes under its $1.5 billion Medium Term Note programme

Another official with debt arranging outfit said with success of many offerings by Indian lenders since July, bonds might have maturity in excess of five years.

Quantitative easing by the US Federal reserve, recent reform moves by the government to rein in the subsidy bill and RBI’s action to cut Cash Reserve Ratio will help to get a finer rate (read issue bonds at lower coupon rate), he said.

At present the paper issued by Indian banks with five years maturity is trading around US treasury plus 3.85-80 basis points.

In August, IDBI had raised SGD 250 million through Singapore dollar denominated bonds having a three-year maturity under MTN. It carries fixed coupon of 3.65 per cent per annum IDBI has raised about $920 million under MTN. Bank will renew MTN programme in January 2013 and scale it up to $3 billion.

Since July, Indian lenders including State Bank of India, Axis Bank and ICICI Bank have raised over $3.5 billion through bonds and loans for on-lending to Indian companies.