IOB raises $500 mn in bonds

State-run Indian Overseas Bank (IOB) raised $ 500 million (around Rs 2,250 crore) by way of senior unsecured bonds under its medium term note (MTN) programme of $ 1 billion (around Rs 4,490 crore), on April 12, 2011 through its Hong Kong branch.

IOB’s MTN programme for $1 billion was subscribed at $1.9 billion by the end of the road show in Singapore, Hong Kong, and London, according to M Narendra, chairman and managing director, IOB.

“Our $1 billion MTN issue was subscribed at $1.9 billion covering 180 investors, out of which 66 per cent was from the Asian market, 26 per cent from Europe and the rest from the other overseas market. We made a benchmark size of $ 500 million for five-and-a-half years for the time being,” he said.

The notes will be issued on April 19, 2011, and would be listed on the Singapore Stock Exchange, the bank said in a filing to the Bombay Stock Exchange. The bond would mature on October 19, 2016. It was raised at a fixed coupon rate of five per cent per annum.

“This will be used to give loans to Indian corporates who need money for expansion in overseas countries,” said Narendra.

He added that the bank could raise more funds from MTN per provisions, but does not have plans at present.

The central government recently infused Rs 1,054 crore capital in IOB, taking the government equity to 66 per cent.