Axis Bank looks to raise $315 mn through ringgit bonds
Axis Bank is considering issuing bonds worth one billion Malaysian ringgits ($315 million) in 2008, sources said on Thursday, following the lead of State Bank of India (SBI).
By TNN |
MUMBAI: Axis Bank is considering issuing bonds worth one billion Malaysian ringgits ($315 million) in 2008, sources said on Thursday, following the lead of State Bank of India (SBI).
Sources said Axis could issue the first tranche of 500 million ringgits in coming months, depending on market conditions. SBI sold bonds worth 500 million Malaysian ringgits earlier this week, the first Indian bank to do so. The state-run bank sold the 5-year bonds at a coupon of 4.9%, sources with knowledge of the deal said.
���The pricing was at less than 200 basis points over the six-month US dollar (London overnight inter-bank rate (Libor),��� sources said, adding the issue was fully subscribed.
Sources added insurance companies took 47% of the bonds, asset managers and pension funds 43%, and banks got 10%. The Indian interest in Malaysia, which has one of the most active local corporate bond markets in Asia, comes as issuers are looking at countries perceived to be more insulated from a slowdown in the global economy.
���What we have seen in Malaysia is a market which has shown quite a lot of resilience in the face of the global volatility,��� said Richard Grainger, head of debt capital markets with Barclays Capital in Hong Kong.
Low interest rates and the ringgit���s strength are important factors as well, as offshore issuers seek to diversify their funding at a time of US dollar weakness, as well as being cheaper to swap the money raised into their domestic currencies.
���While the US dollar market has been a happy home for Indian banks over the past few years in terms of their debt issuances, the market has all but closed,��� Grainger said.
���Not because investors aren���t there or don���t want to buy. They are there and they do (want to buy). But the yields they are demanding are simply too high for the Indian banks to be able to issue profitably,��� he said.
Sources said Axis could issue the first tranche of 500 million ringgits in coming months, depending on market conditions. SBI sold bonds worth 500 million Malaysian ringgits earlier this week, the first Indian bank to do so. The state-run bank sold the 5-year bonds at a coupon of 4.9%, sources with knowledge of the deal said.
���The pricing was at less than 200 basis points over the six-month US dollar (London overnight inter-bank rate (Libor),��� sources said, adding the issue was fully subscribed.
Sources added insurance companies took 47% of the bonds, asset managers and pension funds 43%, and banks got 10%. The Indian interest in Malaysia, which has one of the most active local corporate bond markets in Asia, comes as issuers are looking at countries perceived to be more insulated from a slowdown in the global economy.
���What we have seen in Malaysia is a market which has shown quite a lot of resilience in the face of the global volatility,��� said Richard Grainger, head of debt capital markets with Barclays Capital in Hong Kong.
Low interest rates and the ringgit���s strength are important factors as well, as offshore issuers seek to diversify their funding at a time of US dollar weakness, as well as being cheaper to swap the money raised into their domestic currencies.
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���While the US dollar market has been a happy home for Indian banks over the past few years in terms of their debt issuances, the market has all but closed,��� Grainger said.
���Not because investors aren���t there or don���t want to buy. They are there and they do (want to buy). But the yields they are demanding are simply too high for the Indian banks to be able to issue profitably,��� he said.
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