State-run Union Bank of India has hit the global debt market to raise around USD 500 million through bond issuance, said two merchant bankers working on the issue.
Mumbai: State-run Union Bank of India has hit the global debt market to raise around USD 500 million through bond issuance, said two merchant bankers working on the issue.
This has comes days after successful bond issuances by State Bank of India last week and a dozen of corporate in recent months.
"We have launched roadshows in the leading Asian and European finance centres on behalf of Union Bank of India last week, as part of the bank's pan to launch a benchmark issue. If the market condition is conducive, we will close the sale programme this week," the merchant bankers said Monday.
They also said, this is part of the medium term note (MTN) programme of the city-based bank and the fund will be deployed to meet its overseas fund obligations.
The bank's head D Sarkar could not be reached for comments immediately.
It can be noted that last Friday, SBI set a new benchmark in bond pricing by selling USD 1 billion worth fixed rate five-year senior unsecured bonds at coupon 3.25 percent, 87 basis points (bps) lower than the coupon it is paying to the bondholders of its previous USD 1.25-billion issue last July.
So far 11 companies through 13 issuances raised a whopping USD 7.5 billion this year, as rupee funds remain too costly at around 12-14 percent, while foreign funds are much lower.
The highest pricing of these debts is just under 6 percent, while the lowest coupon is a paltry 3 percent that HDFC Bank is paying to its investors for its USD 500 million issue sold this January.
Last week, Essar Steel said it would dollarise its Rs 20,000 crore rupee loans if the RBI allows doing it. According to i-bankers, RIL, ONGC Videsh and Tata Steel are also planning to borrow abroad.
If the merchant bankers are to be believed, at least USD 4 billion-worth more bond deals are in the making in the immediate short-term, with Reliance Industries (USD 2 billion), ONGC Videsh (USD 1 billion) and Tata Steel working on international bond sale programmes.
Merchant bankers, who did not want to be named, said this year corporate India is going to mop up at least USD 20 billion in foreign debt, mostly through bond sales.
The companies that raised foreign debt this year are Exim Bank (January and March), ICICI Bank, PowerGrid, Tata Communications, Reliance Industries, HDFC Bank, Bharti Airtel (twice in March), Bank of India, IDBI Bank, Suzlon Energy and State Bank.