Exim Bank of India is likely to price its 10-year dollar bonds at close to 125 basis points over the 10-year US Treasury yield, according to information provided by sources.
Exim Bank of India is likely to price its 10-year dollar bonds at close to 125 basis points over the 10-year US Treasury yield, according to information provided by sources. The final pricing was expected to be available only late on Thursday night. The bank is likely to raise a billion dollars through its first overseas bond offering in 2018, according to sources. The final price guidance on the issue stood in the range of 125-130 basis points over the 10-year US Treasury yield, according to latest information available on Thursday evening before going to press. A banker working on the deal indicated it is likely that the bonds may get priced at the lower end of the final guidance. The initial price guidance for the bonds stood at 150 basis points over the Treasury, the consequent compression in the spread indicated high investor interest, sources said.
The bonds are being issued in the Reg S/144 A format, which means investors from the US are allowed to participate in the issue. “Before the US markets opened, the book size was over $2 billion. The response has been great,” said a banker close to the deal. Moody’s Investors Service has assigned a Baa2 rating to Exim India’s proposed senior unsecured notes, issued under its $10 billion Global Medium Term Note (GMTN) programme. The drawdown is from its head office in India, and the bonds will be listed on the London Stock Exchange International Securities Market and the Singapore Exchange Securities Trading, Moody’s stated in a release. The rating outlook is stable, it added. Exim Bank’s bonds usually command a very fine price in the overseas market as the entity is fully owned by the Government of India. Bloomberg data shows that the last time Exim India priced a 10-year dollar bond was in July 2016, when the lender had raised a billion dollars at a coupon rate of 3.375%.
At that time, the issue was priced at 187.50 basis points over the 10-year US Treasury yield. The most recent dollar issue by the lender was a Formosa bond, which was priced in August 2017. The bank had priced its five-year paper at 100 basis points over the three-month dollar Libor to raise $400 million. A Formosa bond is a bond issued in Taiwan denominated in a currency other than the Taiwan dollar.