Indian banks shop for capital overseas
Following successful overseas fund raising by State Bank of India and Exim Bank, other banks are set to tap global capital market to raise funds via bonds to meet requirements of their overseas clients. Sachin Kumar reports.india Updated: Aug 10, 2012 22:49 IST
Following successful overseas fund raising by State Bank of India (SBI) and Exim Bank, other banks are set to tap global capital market to raise funds via bonds to meet requirements of their overseas clients. Syndicate Bank, Indian Overseas Bank (IOB) and Allahabad Bank plan to raise $500 million (around Rs 2800 crore) through Medium Term Notes (MTN) — a debt note that usually matures in 5-10 years.
“We are looking to raise $500 million in the current financial year,” said M Narendra, chairman and MD, IOB. “The funds raised will used for planning overseas expansion.”Last month, SBI raised $1.25 billion (around Rs 7,000 crore) through the issue of five-year overseas bonds at a coupon of 4.1%. Around 350 investors participated in the issue which was subscribed 5.4 times. Exim Bank also raised $500 million overseas at a coupon of 4% last month.
“We have a board approval to raise $1 billion overseas and we raised $500 million through MTN in 2011, remainder $500 million we will raise in the current fiscal,” said an official of Syndicate Bank. “The recent response to the SBI bond offering shows that investors are willing to invest in Indian banks.”
He said that the bank is planning to tap investors in London, Hong Kong, Singapore and Saudi Arabia. Funds raised will be utilised to meet lending requirements of its London branch. Allahabad Bank will use MTN funds for expansion overseas, mainly in Hong Kong.