BoB raises USD 750 mn from overseas bonds

State-run Bank of Baroda (BoB) today said it has successfully raised USD 750 million through an international bond sale at a coupon of 4.8 per cent.
The money, the first from the bank in 144A/REG S note issuance, was raised by its London branch yesterday, India's second largest lender said in a statement here.
Commenting on the bond sale, Bank of Baroda Chairman and Managing Director S S Mundra said, "response from investors to our first 144A/Reg S bond transaction was overwhelming.
"The strong order book (USD 4.4 billion) and the competitive pricing (325 bps above US treasury) is testimony to the credibility and strength of our franchise amongst the global investor base."

"Bank of Baroda set out to create a benchmark transaction and is pleased to have demonstrated, yet again, strong interest in domestic issuers across the global capital markets," he said.
The bonds, rated Baa3 by Moody's and BBB- by Fitch, are due in July 2019.

He said the transaction is significant for the bank for various reasons. This is the first USD bond transaction by a domestic bank in 2014 and it got almost six-time over- subscription with strong participation from investors in Asia, Europe and the US.
Investment bankers said the success of BoB issue shows that the domestic corporates' appetite for international bond market began with right earnest in the New Year after they raised a whopping USD 16 billion last year in forex debt.

The US dollar bond sale is part of the city-based lender's medium-term notes programme and was priced at 325 bps over the US treasury, offering an effective coupon of 4.875 per cent to investors, an I-banker told PTI.
BoB had last tapped the international debt markets in February 2011, raising USD 500 million under its medium term note (MTN) programme.
According to one merchant banker, who wished not to be named, the bank sold the senior unsecured debt (REG S notes) in the international markets yesterday and the issue received USD 4.4 billion worth offers.
He said this was largest issue from India in 2014 so far and one of the cheapest dollar bond sales this year from Asia but with the highest reduction (35 bps) from final guidance of 360 bps over the US T-bills.

The 144A notes mean resident American investors cannot participate in the issue but non-residents can.