IDBI Bank plans to raise $350 mn through overseas bonds in the works

Written by fe Bureau | Mumbai | Updated: Oct 21 2014, 11:26am hrs
Public lender IDBI Bank is looking to raise $350 million via overseas bonds as part of its medium-term note programme, bankers in the know confirmed to FE.

The proposed notes will have a maturity of 5.5 years and a pricing guidance of 300 basis points (bps) over the US Treasury yield, Bloomberg news reported.

In May, Syndicate Bank was the last lender to raise money through the overseas route and mopped up $350 million for 5.5-year bonds at 240 bps over the US Treasury yield. Indian banks have to pay a higher spread as US Treasury yields have fallen, but investors want the same return on investment, bankers said. On May 30, the five-year US Treasury yield was 1.5408%, and 1.4165%on Monday.

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So far in 2014, Indian companies have raised more than $15 billion in offshore bonds with ONGC being the largest issuer. ONGC Videsh raised $2.23 billion through its issue of dual-currency foreign bonds, and raised money through three equal tranches of five-year US dollar bond, 10-year US dollar bond and seven-year euro bond. The five-year US dollar bond was priced at 160 basis points (bps) over benchmark US Treasury, while the 10-year US dollar bond was priced at 207.5 bps above the benchmark.ONGC last raised such bonds in April 2013, and the five-year bonds were priced at 190 bps over treasury and the ten-year bonds were priced at 210 bps over the US treasury.

Bankers expect bond issuances of nearly $18 billion to take place this year as companies are able to access cheaper funding overseas. NTPC confirmed to FE that it is looking for a dollar bond issue for a benchmark size offering with a tenure of 10 years, subject to market conditions. Earlier in 2012, NTPC had raised $500 million at 305 basis points (bps) above the benchmark US Treasury.

Bloomberg news earlier this month also reported that metal and mining company Sesa Sterlite is looking to raise $500 million through USD convertible debt. Sesa Sterlite has $217 million of outstanding convertible debt due October 31, according to data compiled by Bloomberg. The company in 2009 issued $500m of 5% notes exchangeable into equity.