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Despite the rising stress on balance sheets of domestic banks, foreign investors in recent months have been snapping up bond issues because of lack of quality issuances in the global market.
While SBI set the tone by raising $ 1.25 billion at a low 375 bps over US Treasury, the record low money was cornered by the Exim bank at 355 bps over the 5-year US Treasury Note in its $ 500 million fund raising.
One basis point is one-hundredth of a percentage point.
SBI’s issue was largest-ever from a domestic bank.
It was oversubscribed around 6 times, pointing investor appetite in the issue of largest public lender of the country.
Similarly, the Exim Bank raised $ 500 million in overseas bond issue priced 3.55 per cent over the 5-year Treasury Note, making it one of the cheapest by a financial institution in recent time.
As per an analyst, the greater interest in the Exim Bank bonds was due to its 100 per cent ownership by the Government.
Barring SBI and Exim Bank, others namely Axis Bank, ICICI Bank, Indian Overseas Bank and Union Bank of India have also raised money from foreign investors through bond issuances in the past month.
While Axis Bank raised $ 250 million that was priced 390 bps over the 5-year US Treasury Paper, ICICI Bank raised $ 750 million at 400 bps over the Treasury Notes.
Meanwhile, public sector lender Indian Overseas Bank raised $ 500 million with 405 bps over the Treasury Note and Union Bank of India had raised $ 350 million with a yield of 390 bps over the US Treasury Note.
Interestingly, new generation public sector bank IDBI had entered into a new market and raised $ 200 million in Singapore dollar terms, from Singapore market with a coupon of 3.65 per cent.
Talking about the investors’ interest in Indian bonds, a Standard Chartered note said the markets (global) had been waiting for some quality paper from the country.
“While liquidity is ample with the global investors, there are not enough avenues to invest due to the uncertainty in the financial system. So, the recent interest in papers from Indian banks is on expected line,” an analyst said.
There are various institutions like Bank of Baroda, Bank of India, Rural Electrification Corporation and Power Grid Corporation among others, which are looking to raise fund overseas.
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