Indian lender Syndicate Bank, acting through its London branch, last night priced its debut $500 million five-and-a half-year bond at Treasuries plus 285bp, at the tight end of final guidance.
The price whisper released yesterday morning was in the area of Treasuries plus 300bp, which investors deemed to be generous. This was subsequently tightened to a final guidance of Treasuries plus 285bp to 295bp yesterday afternoon.
The deal was expected to raise $350 million to $500 million and ended up issuing at the upper end of that range, even though some investors had put in limit orders. According to one person familiar with the deal, there was “minimal” falling away of orders.
Syndicate Bank’s inaugural dollar bond attracted an order book of $2.5 billion from more than 200 investors, with the deal gaining traction thanks to the generous spread compared to other public-sector banks.
“We’ve put in an order,” said one investor yesterday evening before the deal priced. “Other Indian public-sector lenders are trading at around Treasuries plus 250bp. The initial whisper was about 50bp back of that and it looks likely to print 30bp back.”
Syndicate Bank harnessed the combined might of no less than eight banks — Bank of America Merrill Lynch, Barclays Capital, Citi, Deutsche Bank, HSBC, J.P. Morgan, Royal Bank of Scotland and Standard Chartered Bank — as joint bookrunners.
Comparable issues included bonds due in 2016 from Union Bank of India, IDBI Bank and Indian Overseas Bank. Of these, IOB was considered the key comp as it issued a $500 million five-and-a-half-year bond just last month. It was trading at around Treasuries plus 280bp according to one person, although other quotes put it around Treasuries plus 268bp.
The book was heavily driven by Asian investors, which bought 83% of the deal. European investors took 16% and others 1%. By investor type, funds bought 44%, banks 30%, private banks 18%, insurance 4% and others 4%.
Syndicate Bank, the ninth-largest public-sector bank in India by market share of total loans, held roadshows in mid-April but put off launching a deal immediately due to the market volatility just before the Easter break. The government of India has a 69.5% stake in the bank.
The issuer is rated Baa2/BBB- by Moody’s and S&P with stable outlooks from both rating agencies. The coupon was fixed at 4.75% and the notes were reoffered at 99.771 to yield 4.802%. The bonds mature November 6, 2016
Away from Syndicate Bank, the deal pipeline is burbling. No less than six companies held roadshows in Singapore last Friday and more issuers are lining up to meet investors.
Non stated-owned PRC coal logistics firm China Qinfa Group will kick off global roadshows for a potential high-yield bond today and tomorrow in Hong Kong. The roadshows will move on to Singapore on Friday, London on Monday, New York on Tuesday, Boston on Wednesday and Los Angeles on Thursday.
The company is planning to issue a five-year non-call-three bond. UBS is the sole bookrunner. The proposed senior notes are rated B2 by Moody’s and B by S&P.
Elsewhere, China Resources Land has mandated HSBC as sole global coordinator and a bookrunner for its proposed inaugural dollar benchmark. The tenor is expected to be up to 10 years. BOC International and DBS are joint bookrunners.
The issue is expected to be rated Baa2 by Moody’s and BBB by S&P. The deal will be launched after a global investor roadshow in Asia, Europe and the US.
