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Our Bureau

Offers top $1.3 b against $200-m target

MR M. B. N. RAO

Bangalore , Nov. 20

State-owned Canara Bank has set a new benchmark, securing the finest pricing by any Indian financial institution in the global debt markets for its $250-million medium term note (MTN).

The Chairman and Managing Director, Mr M.B.N. Rao, told Business Line, " We have got a pricing of 129 basis points over the six month London Inter bank Offered Rate (LIBOR)."

But the effective pricing after a fixed to floating rate swap was 125 basis points over LIBOR, he added. This was well below the initially targeted price band of 129-131 basis points.

The bank received an overwhelming response for its MTN issue, the first international capital issue in its 100-year history. Rated +Baa2+ by Moody's, one notch above the sovereign rating, the issue evoked offers for $1.3 billion from global institutional investors against the $200-million target.

As a result, Canara Bank decided to retain an additional $50 million of the over subscription. This is the first tranche of the $1 billion for which the bank has received Moody's rating.

Mr Rao said the bank had left the planned "hybrid capital option open''.

It had initially planned to bundle a $100-million perpetual bond along with MTN. The MTN issue comes with a 10-year call option.

"At the end of this period we have the option of revisiting the pricing," he said.

The issue has been listed in the Singapore Exchange. Road shows for the issue, lead arranged by ABN Amro, Citigroup, HSBC and UBS were conducted in Singapore, Hong Kong and London.

Post issue, the bank's capital to risk weighted asset ratio goes over 13 per cent. The funds would be used for meeting the international credit requirements of its customers and long-term credit requirements, he said.

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Canara Bank $250-m note issue gets fine pricing

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