Thursday 20 March 2014

IDBI Bank raises $ 300 million through offshore bonds

State-owned IDBI Bank on Wednesday has raised Rs 1,828 crore or US $ 300 million through offshore bonds offering 5.05% coupon over five years. The bank will use the proceeds at their Dubai branch only. 

"Our issue was oversubscribed by seven times," said N S Venkatesh, head - treasury at IDBI Bank. "We collected about 2.02 billion as against the stipulated size. We have refunded the oversubscription. There is a huge appetite for Indian securities." 

As per initial guidance IDBI Regulation S bonds were initially proposed to be priced at 370 basis points over the five year US Treasury rate. But, the final price was derived at 350 over US Treasury, which is at 1.55%. This was due to higher subscription demand. The lender needs not to take any hedging as it is a natural hedge as funds will not be brought back to India.
Investors from Asia, Europe and Middle East have invested in the IDBI Bank bonds. The bank has planned to raise about US$ 5 billion under the medium term notes or MTN of which it has already exhausted US$ 3.2 billion. 

US Regulation S is a securities offering, both public and private, which is made by an issuer outside of the United States. 

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