Bank of Baroda, acting through its London branch, priced $500 million of 5.5-year bonds early last Friday morning. The bonds were issued at a spread of Treasuries plus 285bp to yield 5.125%. Around noon on Friday, the new bonds were straddling the reoffer price.
Barclays Capital, Citi, HSBC, J.P. Morgan and Standard Chartered Bank were joint bookrunners.
The bonds priced at the tight end of the final guidance of Treasuries plus 285bp to 290bp and inside the initial guidance of Treasuries plus 290bp to 300bp. The coupon was fixed at 5% and the bonds were reoffered at 99.407.
The deal also priced inside Bank of Baroda’s secondary market curve. On a mid-swaps basis, the new bonds, which mature on August 24, 2016, came at a spread of 247bp or about 10bp inside the bank’s existing bonds maturing in October 2015. However, it is worth noting that the October 2015s had widened by about 20bp in the week before pricing.
Bank of Baroda's latest deal establishes a more liquid benchmark. The Indian bank tapped the US dollar bond market with a 5.5-year bond in March last year, but the size of that deal was only $350 million. That bond priced at a spread of Treasuries plus 230bp. The same banks that arranged that deal also worked on its latest offering, with the exception of Deutsche Bank, which has been replaced by J.P. Morgan this time around.
The Reg-S deal gathered an order book of $1.7 billion from 160 accounts. Asia took up 69%, Europe 29% and offshore US 2%. In terms of investor type, funds bought 42%, banks 34%, retail 18% and corporations and others 6%.
Bank of Baroda, a public sector bank, is 53.8% owned by the government of India and is the fourth largest bank in India by assets. The senior bonds were issued off its medium-term note (MTN) programme. Bank of Baroda is rated Baa2 by Moody's and BBB- by Fitch.
The deluge of issuance from Indian banks looks set to continue. Another public sector bank, Canara Bank, has mandated Bank of America Merrill Lynch, Citi, Deutsche Bank, HSBC and the Royal Bank of Scotland to organise investor meetings, starting today. A US dollar bond in the Reg-S format may follow upon completion of the roadshow, subject to market conditions.
Road King Infrastructure/LDK Solar
Elsewhere, Chinese toll road operator Road King Infrastructure closed a Rmb1.3 billion ($197 million) three-year offshore renminbi bond on Friday evening. The notes priced at a yield of 6%, making it one of the highest yielding dim sum bonds in the market.
The coupon was fixed at 6% and the notes were issued at par. Guidance was in the 6% area. The deal gathered an order book of Rmb2.2 billion. Banks took up 51% of the bonds, funds 36% and private banks 13%. The issue is rated Ba3 by Moody’s and BB- by Standard & Poor’s.
Road King’s new bond matures on February 25, 2014. According to a trader, Road King was able to raise funds more cheaply via the offshore renminbi bond market versus the dollar market. By comparison, Road King’s US dollar bonds maturing in 2014 and 2015 were yielding around 8.7% and 9.95%, respectively, on Friday afternoon.
DBS and J.P Morgan were joint bookrunners, and Banco Bilbao Vizcaya Argentaria and Citic Bank International were senior co-lead managers. The proceeds will go towards debt refinancing, investments in the company’s toll road business and general corporate purposes.
Also on Friday night, Chinese solar wafer maker LDK Solar priced Rmb1.2 billion ($182 million) of three-year synthetic offshore renminbi bonds. It is the first Chinese company outside the property sector to issue a renminbi-denominated US dollar-settled bond.
The bonds offered a coupon of 10% and mature on February 28, 2014. LDK Solar plans to use the proceeds to repay existing debt with remaining maturities of up to one year. Citi and Morgan Stanley were joint bookrunners.