Mumbai: Private sector Axis Bank on Wednesday joined its larger peers like SBI and ICICI Bank to sell overseas dollar bonds, mopping up USD 250 million at a coupon of 5.13 percent which is higher than those offered by other banks.
The city-based third largest private bank said this new sale is only a "re-opening of its existing 5.125 percent senior unsecured notes due 2017".
On August 17, the largest private sector lender ICICI Bank had raised USD 750 million from dollar bonds sale in a 5.5-year fixed rate notes carrying a coupon of 4.70 percent, through its Dubai branch.
Late last month, state-run SBI had mopped the largest and cheapest (by a domestic bank) foreign debt by raising USD 1.25 billion in dollar bond sale.
But the cheapest from a domestic institution came from Exim Bank earlier this month which raised USD 500 million for 4 percent coupon, which at 348 bps above US treasury.
Commenting on the successful completion of the bond sale, Axis Bank President for Treasury, International Banking and Business Banking P Mukherjee said, "in spite of the USD 3.35 billion worth of bonds issued by domestic banks in the last four weeks, the overwhelming investor response to the re-opening of our existing notes highlight the consistent support to the bank's credit from the global investor base".
Barclays, Bank of America Merrill Lynch, Citigroup, HSBC, JP Morgan, and Standard Chartered Bank acted as joint book-runners and lead managers for the Axis Bank bond sale.
The bonds are priced at 390 basis points over the five-year US treasury, at a price of 101.835 to yield 4.710 percent, Axis Bank said.
They were issued by its Dubai International Finance Centre branch and are rated Baa2/stable by Moody's, BBB-/negative by S&P and BBB-/negative by Fitch.
The bank said the deal is significant on various accounts such as this is the first US dollar-denominated five- year money re-opening from an Indian bank since February 2011.
The issue got strong support from investors with the programme getting a good 7.6 times over-subscription and 134 accounts in Asia and Europe participating in the transaction.
The notes are denominated in US dollars, and will bear fixed interest of 5.125 percent a year, with interest payable semi-annually in arrears. The notes are immediately fungible with the existing tranche, taking the outstanding issue size to a total of USD 750 million.
In terms of geographic distribution, the notes were distributed 72 percent in Asia and 28 percent in Europe. The bonds were distributed to high quality fixed income accounts with 52 percent to fund managers, 20 percent to Government banks, 9 percent to private banks, 14 percent to insurance funds and 5 percent to public sector companies.
The SBI issue last month set the tone for others to tap the global market for funds. The Chennai-based state-run Indian Overseas Bank has already said it would hit the market with a USD 500 million dollar bond sale within a month.
Union Bank recently raised USD 350 million and IDBI Bank will announce the quantum of dollar bond sale tomorrow.
Others waiting to raise dollars are Bank of Baroda, Bank of India, Rural Electrification Corporation, Jindal Steel & Power and Power Finance Corp.
However, the biggest fund raiser so far this year has been Reliance Industries, which has mopped over nearly USD 5 billion since February.
First Published: Wednesday, August 22, 2012, 19:53