Kotak Mahindra Bank raises $650 million in debut dollar bond sale

Kotak Mahindra Bank raised $650 million in its debut dollar bond issue from investors in Asia and Europe on Tuesday, pricing the five-year notes at 108 basis points over the benchmark five-year US treasury, people familiar with the details said.

The pricing was tighter than the bank’s initial guidance of 135 basis points. One basis point is 0.01 percentage point.

“Kotak’s story is well known by international equity investors but this was the first time the bank raised money on the debt side,” said a person aware of the details. “The bank did a physical roadshow in Singapore and also had online meets with potential investors in Hong Kong and London earlier this week. Demand was seen from many real money investors like asset managers and pension funds.”


With the five-year US treasury trading at around 4.39%, Kotak’s bond is likely to be priced at 5.47%. The peak order book for the bonds, which were not open to US investors, was about $2.1 billion, people aware of the details said.

A Kotak spokesperson did not reply to an email seeking comment.

Standard Chartered, HSBC, Citibank and JP Morgan were among the bankers to the issue.

“The bond sale was also helped by the fact that ICICI’s bond, which was priced yesterday, tightened by about 5 basis points, indicating that global investors have a favourable view of paper from India,” said a second person aware of the details.

ICICI Bank raised $750 million at 5.42% through five-year bonds, its second bond issue in less than a month after raising $1 billion in July.

Kotak’s bonds are rated ‘BBB’ by global ratings agency S&P, on a par with India’s sovereign investment-grade rating.

“We have equalised the rating on the notes with the issuer credit rating on Kotak Mahindra Bank (BBB/Stable/A-2). This reflects our expectation that the notes shall always rank equally with all of the bank’s other senior unsecured obligations. The notes will constitute direct, unconditional, unsubordinated and unsecured obligations of Kotak Mahindra Bank,” the ratings agency said.