On Monday, the transaction commenced with price guidance for three-year tranche at yen swap offer (YSO) + 70-75 bps and five-year at YSO+78-85 bps.
Export-Import Bank of India (Exim Bank) on Thursday said it has raised 32 billion yen through the Samurai bond market. Funds were raised via three-year and five-year fixed-rate tranches. The coupon rates were 0.59% and 0.66% per annum, respectively. Samurai bonds are yen-denominated bonds issued by foreign governments, agencies or companies in the Japanese market.
On Monday, the transaction commenced with price guidance for three-year tranche at yen swap offer (YSO) + 70-75 bps and five-year at YSO+78-85 bps. The swap rate is the fixed rate which is exchanged for six-month floating rate in yen. As market convention for pricing of Samurai bonds, the yen swap offer side rate is referred as the benchmark.
During the first day of official marketing, transaction saw strong demand from investors despite volatility in global financial markets. The second day continued with revision of price guidance to a spread set at the tight end at YSO + 70 bps and YSO + 78 bps for three-year and five-year tranches, respectively.
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Following the third day marketing, the order book closed at 91 billion yen, representing three times oversubscription, with 78.9 billion yen of demand for three-year tranche and 12.1 billion yen for five-year tranche. The total issue size was capped at 32 billion yen – 25 billion yen for three-year tranche and 7 billion yen for five-year tranche.
The transaction represents Exim Bank’s first standalone Samurai issuance without any guarantee since 2006. The issuer obtained credit rating of BBB+ from the Japan Credit Rating Agency and expects to obtain Baa2 from Moody’s Investors Service Singapore following the pricing on Thursday. The settlement will take place on September 5.
Japan’s interest rate has remained low as Bank of Japan continues to maintain its easing policy, targeting to keep the yield low. Currently, the 10-year Japanese government bond yield is at -0.280%. Under such an environment, demand for Samurai bonds continues to be solid as more Japanese investors are focusing on them to secure the target yield.
David Rasquinha, managing director of Exim Bank, said it has achieved the tightest spread of marketing range. The issuance also captured a good demand from regional accounts as well as key central investors. Harsha Bangari, chief general manager and chief financial officer, said the widespread investor base will help it in future Samurai transactions.
The lead managers for the sale are Daiwa Securities, Mitsubishi UFJ Morgan Stanley Securities, Mizuho Securities and SMBC Nikko Securities. Exim Bank has been raising foreign currency resources from the international market, which constituted approximately 88% of the bank’s total lendable resources as on March 31, 2019. It offers Indian companies a comprehensive range of products and services, supported by analysis and research, with a view to enhancing their international competitiveness.