UTI Bank records low coupon

IndiaÆs third-largest private sector bank raises $250 million from a floating-rate note sale.
UTI Bank has taken advantage of the bond marketÆs record-low borrowing costs to raise $250 million at a bargain-basement price.

The three-year floating-rate deal priced at 47bp over three-month Libor, comfortably inside a $500 million ICICI trade that closed at 54bp just two weeks ago and flat to where that deal was trading in the market at the time of pricing.

The bookrunners, Citigroup and Deutsche Bank, announced the deal on Monday morning and closed the books 36 hours later after drumming up $720 million of orders from eager investors.

Such opportunism was inspired by the success of the earlier ICICI deal û a landmark offering that raised $2 billion on the back of an order book that reached $8 billion.

That response led the State Bank of India, the countryÆs largest bank, to follow ICICIÆs lead by launching a $200 million five-year floater last week.

The rarity of Indian paper has served all three issuers well, but UTI û the smallest of the Indian banks to have come to market this year û will be especially pleased. At just 40bp over Libor, the coupon on the UTI bond is thought to be the lowest ever for an Indian borrower.

The 38 accounts that invested in the Reg-S deal were split 20:80 between Europe and Asia, with 52% going to banks, 45% to asset managers and 3% to retail and other investors.

The bonds will be listed in Singapore and are issued through UTIÆs Singapore branch, which opened in April 2006. UTI is rated Baa2 by MoodyÆs.

The spate of Indian bank deals looks set to continue, with Barclays, Citigroup and Deutsche Bank already mandated to run an offshore deal for Bank of Baroda and State Bank of India rumoured to be returning to the markets with a $1.5 billion deal.
¬ Haymarket Media Limited. All rights reserved.
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