After SBI, IDBI taps overseas mkt

Written by fe Bureau | Mumbai | Updated: Aug 1 2010, 03:51am hrs
Following State Bank of India (SBI), IDBI Bank is now raising funds from the overseas markets. The banks US dollar-denominated senior unsecured bonds will be issued through its branch in the Dubai International Financial Centre (DIFC) under the bank's $1.5-billion medium-term note (MTN) programme.

The issuance amount is yet to be determined, while the maturity has been set at five years six months. The bonds will be issued under English law and listed on the Singapore Stock Exchange.

The proceeds will be used for general corporate purposes in accordance with applicable rules or regulations.

Talking to FE, RM Malla, chairman & managing director, IDBI Bank, said his bank was aggressive into corporate funding and the idea behind the proposed MTN issue was to meet the requirement of those who are looking for foreign currency loans through the bank's branch at DIFC and other places overseas. The money was to be raised on Friday itself. However, now it would be done in London on Saturday,'' added Malla.

Standard & Poor's Ratings Services assigned its 'BBB-' issue rating to the proposed issue of senior unsecured notes by IDBI Bank (BBB-/Stable/A-3).

Earlier, acting through its London Branch, SBI successfully priced an offering of $1 billion. The offering was priced at a coupon of 4.50% per annum, similar to the yield on SBI's previous $750-million bond offering priced in October 2009, despite more volatile market conditions related to the ongoing sovereign debt crises and renewed concerns on a double dip in global economic growth.

The total order book was in excess of $4.5 billion. In terms of allocations, US-based investors received 55% of the allocation while Asian investors were allocated 28% and the balance 17% across European investors. In terms of investor type, asset and fund managers subscribed for 63% of the deal, commercial and investment banks subscribed for 9%, private banks subscribed for 15% and insurance/pension funds subscribed for 4%. Strong interest from US-based investors underscores SBI's strong credit profile and its position as India's largest bank.