SBI and Exim among banks eyeing Swiss mkt

After Union Bank of India, other state-owned institutions, including State Bank of India and Exim Bank, are planning to raise forex funds at cheaper rates from Swiss markets.

Union Bank of India last week raised a CHF 160 million 4.5 year under its MTN programme.

The transaction marks the first Swiss Franc bond issue by an Indian borrower following a hiatus of 23 years and the third Swiss Franc transaction out of India. This is a landmark deal which paves the way for Indian issuers in the Swiss market. Barclays was the sole bookrunner for this transaction.

The transaction saw strong investor demand allowing Union Bank to upsize the issue size from CHF 125 million to CHF 160 million and price at CHF MS+200 bps.

Union Bank?s US dollar bonds due 2016 were trading at 5yr UST+273 bps on the day of announcement of the transaction.

The bonds were allocated to high-quality and well diversified investor base. The transaction opens up a new segment of investors for Union Bank ? including Swiss private banks, asset managers and insurance companies while also allowing Union Bank to raise funding 30bps cheaper than a new US dollar bond.

Jaideep Khanna, managing director and head of investment banking, Barclays Capital, India said ?Swiss investors are bullish on on India growth story. It now easier for other Indian financial institutions to access this market.?

?Following the roadshow by Union Bank in November last year, we have been engaged with several Swiss investors and have seen a number of them setting up credit lines for Indian issuers. It is a fantastic start for Indian borrowers,? he said.

The Swiss Franc bond market offers a unique source of funding and the market is uncorrelated to other international markets. The investor base in this market is very loyal, allowing issuers to tap into this market regularly. More than 90% of the issuers in the Swiss Franc bond markets are rated single A or higher and it is rare for a BBB credit to access this market. MV Nair, CMD, Union Bank of India said, ?The Swiss investors are keen to broaden their asset portfolio?.