India’s premier export finance institution, Export-Import Bank of India, overcame market volatility as it priced on February 4 a US$500 million bond offering that attracted strong investor demand.

The Reg S 5-1/2 year deal was priced at 99.404% with a coupon of 2.75% to offer a yield of 2.868%. This was equivalent to a spread of 155bp over the US treasuries, or at the tight end of the final price guidance of between 155bp and 160bp. The coupon was the lowest ever achieved by an Indian financial institution for a public US dollar bond.

The pricing cut through the secondary trading levels of similar bonds and was tighter than Eximbank’s bond issue in March 2014, which was also for US$500 million and had a tenor of 5-1/2 years. This was the tightest spread versus US treasuries among all Indian US dollar bond transactions since 2007.

With this deal, Eximbank became the first Indian bank to access the international debt capital markets in 2015. The bank announced the deal during the Asia morning session on February 4 with an initial price guidance of 175bp area. It capitalized on strong market conditions and captured the focus of investors amid competing supply.

After gathering a solid order book from Asian investors, the transaction continued to gather momentum during the European trading session and the final price guidance at Asia close at between 155bp and 160bp.

“The response reflects the high level of interest in Indian paper,” says Eximbank deputy managing director David Rasquinha in a statement. “The swiftness of the execution process was impressive and ensured a strong momentum. We were able to pick the optimal execution window and are very satisfied with the outcome.”

The deal, issued through the bank’s US$6 billion medium-term note programme, contains a change of control clause if at any time the government of India owns less than 51% of Eximbank’s issued share capital.

The final order book amounted to US$2 billion from 150 investors with 52% of the bonds allocated in Europe, 36% in Asia and 12% to US offshore accounts. The paper was distributed to high quality investors with 47% going to fund managers, 27% to banks, 11% to insurance companies and pension funds, 11% to central banks and sovereign wealth funds and 4% to private banks.

Barclays, Citi and Standard Chartered were the joint bookrunners for the transaction. – CS