India's Bank of Baroda raises $700 million via dollar bonds at tighter spreads

India's Bank of Baroda has accepted bids worth $700 million through the sale of dual-tranche dollar-denominated debt at a narrower spread than previously indicated, similar to peer State Bank of India, two merchant bankers said on Friday.

BoB, India's second-largest state-run lender by assets, has accepted bids ‌worth $400 million ⁠for ⁠three-year bonds and $300 million for five-year papers at a spread of 90 basis ​points and 100 bps over Treasuries, about 30 bps below the initial guidance.

The ​lender will pay a coupon of 5.1140% on the three-year issue and 5.3180% on the five-year papers, which will be payable semi-annually, ​it said in a notice to ⁠stock exchanges ‌late on Thursday. Market intelligence firm CreditSights sees the ​fair value ​of the notes at around 5 bps below ⁠SBI's paper as both banks are underpinned by central ​government support and have similar credit metrics.


This is the ​first time that BoB has tapped the dollar bond market in seven years. Indian banks have been rushing to the market after the Reserve Bank of India's swap facility, announced in June, made overseas borrowing cheaper.

SBI raised $500 million through a ‌five-year issue at 5.25% coupon payable semi-annually earlier this week. The issue was sold at a spread of ​88 bps over ​Treasuries, sharply lower ⁠than an earlier guidance of 120 bps, with bidding nearly touching $2.5 billion.

Private lenders HDFC Bank, Axis Bank and ICICI Bank have also raised ​funds through dollar bonds since June at spreads tighter than their initial guidance.

BoB will use the proceeds towards various funding requirements, and the bonds will be rated 'BBB', 'BBB-' and 'BBB+' by S&P, Fitch Ratings and CareEdge Ratings, in line with the issuer's ratings.