Auto parts maker Motherson Sumi is looking to tap into the overseas bond market to raise $500 million in euro-denominated bonds, investment banking sources confirmed to FE.
?It will take 15-45 days for the company to finalise the deal since it is still in the early stages. They might look at US Reg S 144A bonds,? said people close to the deal.
Bloomberg news reported on Wednesday that Motherson Sumi has hired Deutsche Bank, HSBC, ING, JPMorgan and Standard Chartered for the issue. Indian companies have been tapping into overseas bond markets given spreads are narrowing in the wake of higher investor confidence in the country.
Bharti Airtel was the last company to issue euro-denominated bonds. On May 13, Bharti Airtel, through its Netherlands subsidiary, concluded one of the largest overseas bond issues, raising $1 billion in dollar-denominated bonds and 750 million euros in euro-denominated bonds.
The dollar bond was raised at 10-year treasuries plus 270 basis points (bps) while the Euro bond was raised at Euro mid swaps plus 225 bps.
With appetite for Indian paper growing, bankers expect bond issuances worth $15-16 billion in offshore markets. ICICI Bank was the last Indian bank to go through the overseas route, raising $250 million at 185 basis points over five-year US treasury earlier this month.
Bankers say that this is the tightest spread ever since 2007.The spread for the same paper in the secondary market was 5 basis points higher.
SBI in April raised $1.25 billion via 5.5-year and 10-year bonds offering rates of 240 bps and 265 bps over US Treasury. Syndicate bank was the last Indian bank to raise money through the overseas bond route, raising $350 million.
