Exim Bank of India returns with a $200 million deal

Exim Bank prices its second deal this year – a $200 million five-year bond.

Government-owned Export-Import Bank of India yesterday raised $200 million from its second US dollar-denominated bond deal this year. The new bonds are senior unsecured five-year notes with a maturity date of April 21, 2015 -- a couple of months later than its outstanding $300 million 4.375% five-year bonds, which were issued in January this year and mature in February 2015.

The new bonds were issued under Exim's existing $1 billion medium-term note programme and pay a fixed rate coupon of 4.4%. They were re-offered at 99.543 for a yield of 4.503%.

Initial guidance was sent out early Wednesday at Treasuries plus 200bp. This was revised to Treasuries plus 192.5bp to 197.5bp by the close of trading in Asia. London orders continued to come in after Asia closed, thus pushing the deal to price at the tight end of guidance at 192.5bp. By late afternoon yesterday the bonds had tightened to 191bp on the bid.

Joint arrangers looked to Exim's February 2015 bonds to set the price. Before the new deal was announced, the February 2015s were trading at Treasuries plus 181bp, but by the time it priced they had widened to 192.5bp. Given their 1.5-month longer maturity, the new bonds thus printed through the existing bonds.

The deal was 3.75 times covered, booking $750 million from 91 accounts. Asian investors bought 67% of the deal and Europe took the remaining 33%. In terms of investor type, fund managers were allocated 47%, banks 39%, private banks 12% and other investors 2%.

Compared with the February 2015s, this latest issue wasn't large enough to count as a benchmark size and, as a result of the lower liquidity, did not attract the same volume of demand.

Congestion in the debt pipeline is building up with several financial institutions and high-yield corporates looking to issue. Country Garden, Sigma Capital, Essar Steel Holdings, Kaisa Group, Korea Exchange Bank, Glorious Property Holdings and Evergrande Real Estate have all announced mandates.

Evergrande is looking to issue a $600 million tap of its $750 million five-year bond that was issued in late January this year. Essar Steel Holdings, Korea Exchange Bank and Glorious Property Holdings are all in the process of conducting investor talks and roadshows.

"The market is very strong right now," commented one source. "Issuers understand that the market is strong and are taking advantage of the better backdrop," he added.

The Exim notes are rated Baa3 by Moody's and BBB- by Standard and Poor's. The S&P rating is close to the Indian sovereign rating (BBB) because the rating agency views the "principal source of risk for the bank to be the sovereign risk -- particularly the weak fiscal profile of the government of India".

Citi and Deutsche Bank were joint arrangers of the deal.

¬ Haymarket Media Limited. All rights reserved.

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