United Bank raises $350 million under MTN programme
State-owned Union Bank of India (UBI) has raised $350 million by selling offshore bonds as part of its $2 billion medium-term note (MTN) programme.They will be listed in the Singapore Exchange.
By Saikat Das, ET Bureau | Updated:
MUMBAI: State-owned Union Bank of India (UBI) has raised $350 million by selling offshore bonds as part of its $2 billion medium-term note (MTN) programme. They will be listed in the Singapore Exchange. A basis point is 0.01 percentage point.
These bonds of five-and-a-half year maturities come with a coupon rate of about 4.50%. The bank has arrived at such pricing after adding a 280-basis point spread over and above the 5-year US Treasury, which is currently trading in the range of 1.70-1.74%. The effective yield has come around 4.54%. "The entire fund will be used for offshore operations," a senior bank official told ET, adding that rates offered were a win-win for both the investors and the bank. Institutional investors across Asia, Europe and the Middle-East have subscribed to the issuance.
UBI has sold bonds through their Hong Kong branch. These offshore bonds are called Regulation S where they may not be necessarily offered and sold within the US. Standard Chartered Bank, Citi Bank, BNP Paribas, Bank of America Merrill Lynch and JPMorgan Chase were the investment bankers for the issue building. The securities are rated Baa3 by Moody's Investors while S&P, another global rating company, has assigned a BBB- to the issuance.
Almost two weeks ago, the State Bank of India (SBI) had raised a total of $1.25 billion by selling bonds in two maturities: five and ten years. The five-year bond was priced at a spread or gap of 205 bps over the 5-year US treasury, which would be equivalent to a yield of 3.62%. This is significantly below than the Union Bank of India's spread at 280 bps. "Being the largest Indian lender SBI commands premium among investors, who always consider the bank as quasi-government bond. The rest state-owned banks do not enjoy the same," said an investment banker.
These bonds of five-and-a-half year maturities come with a coupon rate of about 4.50%. The bank has arrived at such pricing after adding a 280-basis point spread over and above the 5-year US Treasury, which is currently trading in the range of 1.70-1.74%. The effective yield has come around 4.54%. "The entire fund will be used for offshore operations," a senior bank official told ET, adding that rates offered were a win-win for both the investors and the bank. Institutional investors across Asia, Europe and the Middle-East have subscribed to the issuance.
UBI has sold bonds through their Hong Kong branch. These offshore bonds are called Regulation S where they may not be necessarily offered and sold within the US. Standard Chartered Bank, Citi Bank, BNP Paribas, Bank of America Merrill Lynch and JPMorgan Chase were the investment bankers for the issue building. The securities are rated Baa3 by Moody's Investors while S&P, another global rating company, has assigned a BBB- to the issuance.
Almost two weeks ago, the State Bank of India (SBI) had raised a total of $1.25 billion by selling bonds in two maturities: five and ten years. The five-year bond was priced at a spread or gap of 205 bps over the 5-year US treasury, which would be equivalent to a yield of 3.62%. This is significantly below than the Union Bank of India's spread at 280 bps. "Being the largest Indian lender SBI commands premium among investors, who always consider the bank as quasi-government bond. The rest state-owned banks do not enjoy the same," said an investment banker.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
