The Hindu Business Line : Canara Bank to finalise pricing for global issue

Public sector Canara Bank's pricing for its international capital issue of $300 million is likely to be closer to 100-125 basis points over the London Interbank Offered Rate (LIBOR).

Six-month LIBOR is currently about 5.25 per cent. High-level Canara Bank officials sources indicated that the rating exercise for the issue comprising both perpetual debt and 15-year medium term notes was almost complete. The rating exercise for the borrowing is being done by global rating agency Moodys.

The sources indicated that the rating was likely to be in line with India's sovereign rating, which is just one notch below investment grade.

Favourable pricing

The favourable pricing was also largely on account of the favourable global climate for Indian papers particularly domestic banks with global operations. Besides there were expectations of an upgrade of India's sovereign rating to investment grade.

Further, the bankers said the Federal Reserve Board leaving the Fed Funds rate unchanged was positive for domestic companies planning international issue.

But bankers attending Bancon 2006 in Hyderabad said not many of them intended taking advantage of the Reserve Bank of India's liberalisation for raising tier one capital in the international markets. This was largely due to the postponement of compliance to Basel II norms by another two years.

More Stories on : Overseas Borrowings | Public Sector Banks | Interest Rates

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