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India’s EXIM selling benchmark 5-yr dollar bond

Despite widespread concerns about India's economic and fiscal outlooks,SBI still attracted an order book of $6.8 billion.

Written by Agencies | Mumbai | Published: July 31, 2012 1:01:15 pm

Export-Import Bank of India launched a five-year benchmark-sized dollar bond sale on Tuesday,two sources with direct knowledge of the deal said,becoming the second state-run lender to seek funding from overseas markets in as many weeks.

EXIM has given an initial guidance of around 375 basis points over U.S. Treasuries for the benchmark deal,which usually refers to deals of around $500 million.

The lender is aiming to price the Reg S bonds,which are sold to overseas investors outside the United States,as early as the end of the day,the sources said.

The deal comes about a week after India’s biggest lender State Bank of India raised $1.25 billion through the sale of five-year dollar bonds at 375 bps over U.S. Treasuries.

Dealers said EXIM was benefitting after SBI paved the way,while Indian bank’s overseas debt has seen spreads tighten after top-ranked private sector lender ICICI Bank posted strong quarterly results last week.

The deal is seen pricing at least 15 to 20 basis points tighter than the guidance,two market sources said.

Spreads for last week’s SBI bond have tightened since their launch and are currently trading at 359/363 over U.S. Treasuries,bankers said.

Healthier demand this week for global risk assets on the back of hopes for monetary stimulus measures from the Federal Reserve and European Central Bank meetings this week could support demand for EXIM’s dollar debt.

Despite widespread concerns about India’s economic and fiscal outlooks,SBI still attracted an order book of $6.8 billion.

EXIM will become only the fourth dollar bond issuer from India this year after Reliance Industries,Axis Bank and SBI.

More Indian borrowers,including companies,are expected to access overseas markets for funding,especially after the Reserve Bank of India left interest rates unchanged on Tuesday,keeping domestic rates high.

Indian Overseas Bank,Jindal Steel and Power and Power Finance Corp are some of the firms watching dollar bond markets to raise funds.

ICICI Bank is also waiting on the sidelines after hiring underwriters for an up to $1 bln bond issue.

Standard Chartered and Citigroup are the arrangers for the EXIM sale,said the sources.

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