Union Bank of India taps dollar debt market after 12-year hiatus

Union Bank of India has accepted bids worth $600 million for a public sale of U.S. dollar-denominated bonds through its Dubai branch, its first such issuance in more than 12 years, two merchant bankers said on Tuesday.

The bank raised $300 million each through three-year and five-year ‌papers at ⁠a coupon ⁠of 5.23% and 5.4170%, respectively, the lender said in a notice to ​stock exchanges.

The three-year bonds were priced at 93 basis points above U.S. Treasuries, ​while the five-year tenor is priced at 102 bps above Treasuries, sharply below the bank's initial guidance of 120 bps and ​130 bps.


The lender is the third ⁠state-run bank ‌to tap the dollar debt market through the public route since June, when the central bank announced a ⁠discounted hedging facility that lowers the cost of borrowing for financial institutions.

India's top two state-run lenders, State Bank of India and Bank of Baroda, have raised $500 million and $700 million, respectively, through a public sale, with the former also adding $600 million through the private route.

Separately, IDFC First Bank also raised $350 million through a private placement of five-year securities through ‌its GIFT City branch, a week after the lender raised $600 million through three-year debt.

Banks have been ​scrambling to ​complete their dollar issuances, ⁠with most funds being used to provide leverage to customers who will deposit them under the RBI's discounted dollar deposit scheme.

Earlier this month, ​the RBI said the window provided to banks for hedging non-resident deposits would end a month early, on August 31.

The rush has prompted a wave of offshore fundraising by Indian lenders, which raised $11.25 billion through bond issuances from June to August.