State-run IDBI Bank raised $500 million through a five-year bond sale in the international markets at a coupon of 3.75 per cent. It is considered as the cheapest ever coupon rate for the bank and the bonds will be listed on the Singapore Exchange.
According to IDBI, the money was raised by its Dubai International Financial Centre branch and received an over-subscription of $2.25 billion from 190 accounts from the Asian and European investors.
“The final pricing for the $500-million international debt issue from IDBI Bank got tightened by 15 basis points to 300 bps over the US Treasury bills. The issue marks the first long five-year tenor issuance by the bank,” said Jujhar Singh, Managing Director & Head of Debt Capital Markets, Standard Chartered Bank South Asia.
While StanChart was the lead arranger, HDFC was the other book-runner for the issue.
“These bonds maturing in January 2019 are the longest tenor bonds issued by IDBI in the US bond market, achieving the lowest-ever coupon and tightest-ever pricing for IDBI Bank for a five-year tenor,” Singh said.
The issue has a settlement date of March 25 and coupon dates of July 25, 2013 and January 25, 2019 which also is the maturity date. It has a re-offer yield of 3.792 per cent with the spread being US Treasury plus 300 bps (3 per cent) apart from having a 100 per cent put option if aggregate of direct and indirect government shareholding falls below 51 per cent, Singh said.
As many as 63 per cent of investors were from Asia, while the remaining were from Europe.
Over 45 per cent of the overall investors were banks, 30 per cent fund managers and 25 per cent private banking clients. The senior unsecured Reg S bonds carry BBB- rating from both S&P and are part of the bank’s $.5 billion medium term note programme.
On the rationale for five-year, 10 months tenor, Singh said the issue will help IDBI spread its debt distribution profile and meet its pricing targets, which helped it achieve a final pricing -3.5 bps tighter than secondary trading levels of its US bonds maturing in 2018.