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BoI raises $750mn overseas debt at 3.125%, its lowest ever

By Religare

Bank of India raised USD 750 million by selling five-year bond to international investors at a coupon of 3.12 per cent, it lowest pricing so far, reported PTI.

Bank of India's USD 750-million issue was a big success with the offer getting response for USD 3 billion.

Two sources at investment bankers told PTI that what is important is the pricing which was fixed at 185 basis points over the US treasury, thus yielding a coupon of 3.125 per cent per annum.


I-bankers said this is BoI's first dollar money issue in two years and the lowest pricing so far.

A call to the bank chairperson and managing director Vijaylaxmi Iyer remained unanswered.

For the five-year dollar money, the bank had given an initial pricing of 2.05 per cent over the US treasury which came down to 1.85 per cent at close, they added.

Yesterday, Reliance Communications became the first domestic firm to raise overseas debt this fiscal by selling USD 300 million worth sub-investment grade or junk bonds to international investors at 6.5 per cent.

The city-based BoI has hired Barclays, Citi, HSBC and JP Morgan for the issue, which will be listed on the Singapore exchange and is part of the bank's USD 5 billion medium term note programme.

It can be recalled that the bank had planned to raise the money in February, but deferred the plans due to enough liquidity on slow credit growth.

The bank has a board approval to raise USD 5 billion through MTN beginning 2005 and has so far raised USD 2.5 billion.

I-bankers said there were 255 orders from investors who were majority Asians (69 per cent), 30 per cent Europeans, and the remaining 1 percent offshore American investors.

In terms of investor profile, the bankers said the 56 per cent were fund managers, 35 per cent banks and 7 per cent private banks and the rest 2 insurers and pension funds.

The issue has been rated by both Moody's and Standard & Poor's at Moody's Baa3 and BBB- respectively, on par with their ratings on the sovereign considering the fact that the bank is majority owned by the government.

It can be noted after a record USD 20 billion debt raising in 2014, the corporate withdrew from the overseas debt market as the Fed taper talk loomed and other global volatility increased.


Since mid-February there has not been practically any serious issuers in the market. State-run oil marketer BPCL is currently in the market to raise some funds.

Story first published: Wednesday, April 29, 2015, 12:50 [IST]
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