State Bank of India (SBI), the country's largest lender, plans to raise $500 million through dollar-denominated bonds by the year end. According to investment bankers, if SBI raised the amount immediately, it should be able to price it at around 2.2%-2.5% over US Treasuries. The five-year US Treasuries was at 0.8540% and the 10-year was at 1.9896% on Friday.
SBI should be able to raise the funds at a cheaper price this time, according to investment bankers. In July, 2012, the public sector lender had raised $1.25 billion from an overseas five-year dollar-denominated at 3.75% over US Treasuries to yield 4.125%. The issue was over-subscribed more than five times. Another public sector bank, Bank of India, is also in talks with investors to raise funds from the overseas market by March end, according to a bank executive, who did not want to be named.
In January 2013, five Indian companies raised a total of about $2.43 billion by issuing bonds in the overseas markets. Exim Bank mopped up $750 million through 10-year dollar bond at 4.119% and attracted subscriptions worth $6.4 billion. Billionaire Mukesh Ambani's Reliance Industries Limited raised $800 million through overseas perpetual bonds, or those without a set maturity at a coupon of 5.875%, the lowest ever interest rate for an debt raise of its kind.
The Netherlands unit of Tata Communications raised SGD250 million through a three-year Singapore dollar-denominated bond. It was the first Indian company to sell its issue overseas without any rating from agencies such as Standard and Poor’s (S&P), Moody’s or Fitch. The order book of Tata Communications’ issue stood at SGD3.5 billion.
ICICI Bank also raised SGD225 million through a 7-year Singapore dollar-denominated bond in January. The largest private bank of the country had given a price guidance of 4% while the final pricing saw tightening of 0.35% to 3.65%. Power Grid Corporation raised $500 million by selling dollar denominated 10-year bond issue at an interest of 3.875%.
Investment bankers said fine pricing attracted for overseas bonds issuances by Indian companies in January solidifies the huge demand for Indian paper. This has encouraged more companies to raise funds through the overseas route. They added that many Indian private and public companies are already in talks to raise funds through this route.