Barclays, Deutsche and HSBC priced Bank of India's debut Reg-S $250 million five-year bond at the aggressive end of the deal's indicative range after New York's open on Tuesday (September 27).
Marketed to investors at 85bp-90bp over midswaps, the notes were sold at 99.762%, with a coupon of 5.375% and a yield to maturity of 5.43%. That equates to 85bp over swaps or 130.8bp over US Treasuries.
Thanks to its 60% ownership by the Indian Government, Moody's and S&P have rated the deal at the sovereign ceiling of Baa3/BB+.
Pricing at the aggressive end of guidance means that the notes priced through a one-year shorter bond by ICICI, which was trading at 86bp over swaps at time of pricing. More significant is the fact that the bond priced about 10bp wide of SBI's 2009 deal. The latter has a one notch higher rating of Baa2/BB+ from Moody's and the one-year curve is worth about 7bp.
Bank of India took advantage of its relative scarcity value in a market environment with plenty of appetite for Indian paper. This is Bank of India's first overseas deal and only the fourth Indian deal to tap offshore markets this year following IRFC, SBI and Vedanta.
Pricing was helped by a very strong order book that was almost four times oversubscribed with orders amounting to $900 million. The issue attracted a broad range of investors with a total of 113 accounts, including insurance companies, fund managers, banks and private banks. However banks accounted for the bulk of the deal, making up 56% of the deal. Asset managers grabbed 21%, with the remaining 12% heading to retail.
Distribution was taken up primarily by Asian based accounts, totaling 55% of the book. Singapore accounts made up 21%. European investors accounted for 42%, while the remainder went to offshore US and Middle Eastern clients.
Despite the large order book, both the leads and the issuer chose to maintain the deal size in order to maintain a high quality investor book. Originally approved for up to $350 million, the deal was kept at the $250 million size to give the asset a little more scarcity value and attain strong secondary support.
Indeed at the break on Thursday the notes had already traded up to 129bp over Treasuries and were still garnering a lot interest through out the day.