State Bank of India (SBI), the country's largest lender, plans to raise $500 million through dollar-denominated bonds by the year end. According to investment bankers, if SBI raised the amount immediately, it should be able to price it at around 2.2%-2.5% over US Treasuries. The five-year US Treasuries was at 0.8540% and the 10-year was at 1.9896% on Friday.
SBI should be able to raise the funds at a cheaper price this time, according to investment bankers. In July, 2012, the public sector lender had raised $1.25 billion from an overseas five-year dollar-denominated at 3.75% over US Treasuries to yield 4.125%. The issue was over-subscribed more than five times. Another public sector bank, Bank of India, is also in talks with investors to raise funds from the overseas market by March end, according to a bank executive, who did not want to be named.
In January 2013, five Indian companies raised a total of about $2.43 billion by issuing bonds in the overseas markets. Exim Bank mopped up $750 million through 10-year dollar bond at 4.119% and attracted subscriptions worth $6.4 billion. Billionaire Mukesh Ambani's Reliance Industries Limited raised $800 million through overseas perpetual bonds, or those without a set maturity at a coupon of 5.875%, the lowest ever interest rate for an debt raise of its kind.
The Netherlands unit of Tata Communications raised SGD250 million through a three-year Singapore dollar-denominated bond. It was the first Indian company to sell its issue overseas without any rating from agencies such as Standard and Poor’s (S&P), Moody’s or Fitch. The order book of Tata Communications’ issue stood at SGD3.5 billion.
ICICI Bank also raised SGD225 million through a 7-year Singapore dollar-denominated bond in January. The largest private bank of the country had given a price guidance of 4% while the final pricing saw tightening of 0.35% to 3.65%. Power Grid Corporation raised $500 million by selling dollar denominated 10-year bond issue at an interest of 3.875%.
Investment bankers said fine pricing attracted for overseas bonds issuances by Indian companies in January solidifies the huge demand for Indian paper. This has