UTI Bank to sell $250 m bond to meet loan gowth overseas

Jan 22 | Updated: Jan 23 2007, 05:30am hrs
UTI Bank Ltd is selling $250 million of bonds to raise funds for loan growth overseas, according to the banks chairman. Proceeds will be used to fund loan business in Singapore where UTI Bank opened a branch in April, PJ Nayak, the banks Mumbai-based chairman, said in an interview. There will be strong loan volume there this quarter, he said.

The bank hired Citigroup Inc and Deutsche Bank AG to arrange the sale and will meet investors in Singapore on Tuesday, according to Parthasarathi Mukherjee, its treasurer in Mumbai. It aims to complete the sale this week, Mukherjee said.

Indian banks are borrowing much more money due to the rapid loan growth the banks are experiencing, said Eugene Kim, managing director of Tribridge Investment Partners Ltd. in Hong Kong, a hedge fund which manages $100 million. There is also strong demand from investors, especially from the US, because they are very bullish on India.

Bank loans in India are set to grow 29% in the year to March 31, according to estimates from the central bank. Lending grew an average of more than 35% in the past two financial years.

The $775 billion economy has expanded an average of more than 8% in the previous three financial years and will accelerate to 9% this year, according to government estimates.