Exim Bank raises SGD250 mn from overseas bond sale, sets new record pricing

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SummaryThe Exim Bank today set yet another benchmark in pricing its overseas bond sales.

The Exim Bank today set yet another benchmark in pricing its overseas bond sales, mopping up 250 million in Singapore dollars (SGD) at a coupon of 3.375 per cent, the cheapest five-year money raised by any domestic institution so far.

This is the second overseas debt raising by the bank in 40 days, when on August 1, it had sold USD 500 million bonds at a coupon of 4 percent, which was just 348 basis points above the US treasury's. The issue had an over-subscription of five times.

That foreign investors are making a beeline for quality debt instruments from Indian institutions was yet again clear from huge demand the latest Exim Bank issue has generated-- a good 2.5 times the offer size.

Exim Bank chairman and managing director TCA Ranganathan could not be reached over phone.

According to sources at the merchant bankers-Citigroup India and StanChart-, the issue had a guidance pricing between 3.375 and 3.350 per cent.

"But the issue was finally priced at 3.375 per cent given the huge demand and the 100 per cent sovereign guarantee Exim offers," a merchant banking source said, adding the yield will also be same as the price is 100 percent at par.

Commenting on the success of the bond sale, Citi India head for capital markets origination Rajiv Nayar said, "This was an excellent issuance by a sophisticated issuer like Exim Bank. Their inaugural five-year SGD 250 million bond was strongly subscribed by several regional asset managers and private banks resulting in tight pricing of 3.375 per cent per annum, which, on a swapped basis is circa 5 bps per annum, tighter than trading levels of their recently issued five-year USD bonds."

Over 50 investors participated in the programme with around 82 per cent coming in from Singapore, around 14 per cent from Hong Kong and around 4 percent from Europe, the source said.

Out of this, around 42 per cent are banks, around 30 per cent AMCs with private banks constituting around 28 per cent.

Nayar further said, "Citi has consistently been a joint book-runner on Exim Bank's bond offerings since 2004, demonstrating our superior execution skills and dominance in the US dollar, local currency and now the SGD bond markets".

The issue had a rating of Baa3 from Moody's and BBB-from S&P.

It can be noted that domestic banks have been on a fund raising spree since July, which was kicked by the nation's largest lender SBI

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