BackBank of India raises $750 million by selling bonds in Asia, Europe
The money will be used to provide liquidity to the bank's overseas branches, says bank's chief general manager
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Mumbai: Public sector Bank of India (BoI) has raised $750 million by selling five-year bonds to international investors based in Europe and Asia under its $5-billion medium term note (MTN) programme in a deal which opened and closed on Tuesday.
Sankara Narayanan, chief general manager, international banking, BoI, said the bank raised the money at 3.21% yield or 185 basis points above the five-year US treasury. One basis point is 0.01 percentage point.
“We got bids of more than $3 billion for the issue and decided to keep $750 million. With this we have tapped $2.8 billion of our $5 billion MTN programme," Narayanan said.
The bonds were sold through the bank’s Jersey branch based in Channel Islands and the money will be used to provide liquidity to the bank’s overseas branches, Narayanan said.
“We have 26 branches abroad and this money will be used to finance assets (loans) there. It is part of our periodical fund raising through MTN," Narayanan said, adding that more than 250 investors from Asia and Europe subscribed to the issue which was a so-called ‘Regulation-S’ transaction and hence not open to US investors.
A banker involved in the transaction said that the issue was priced at the lower end of the bank’s initial price guidance.
HSBC Holdings Plc, Citigroup Inc, Barclays Plc and JPMorgan Chase & Co were the bankers to the issue.
Global rating agency Standard & Poor’s Ratings Services assigned a ‘BBB-’ long-term issue rating to the bonds, in line with India’s sovereign ratings.
“The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of BoI. They shall at all times rank at par among themselves and with all other unsecured obligations of the bank," S&P had said.
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