The Export-Import Bank of India (Eximbank) returned to the Samurai bond market as it priced on August 29 a dual-tranche offering totaling 32 billion yen (US$300 million).
The transaction comprises 25 billion yen for three years with a coupon of 0.59% per annum and 7 billion yen for five years with a coupon of 0.66%. This represents Eximbank’s first standalone Samurai issuance – without any guarantee – since 2006.
The bank has issued Samurai bonds guaranteed by Japan Bank for International Cooperation (JBIC) in 2011 and 2014, and uridashi bonds in different currencies, including yen targeting Japanese retail investors. An uridashi bond is a secondary offering of bonds outside Japan – they can be denominated in yen or issued in a foreign currency.
The deal arrangers – Daiwa Securities, Mitsubishi UFJ Morgan Stanley Securities, Mizuho Securities and SMBC Nikko Securities – commenced marketing the latest offering on August 26, announcing a price guidance of between 70bp and 75bp over the yen swap offer for the three-year bonds, and between 78bp and 85bp for the five-year bonds.
Amid the volatility in the global financial markets due to the US-China trade tension, the transaction garnered a strong demand, both from domestic and overseas investors, during the first day of marketing with the order book growing rapidly at the tight end of the price range.
The arrangers revised the price guidance on the second day of marketing to 70bp over the yen swap offer for the three-year bonds and to 78bp for the five-year bonds. The total order book amounted to 91 billion yen, with the three-year tranche attracting 78.9 billion yen worth of demand and the five-year tranche 12.1 billion yen.
The size of the order book reflects the solid demand for Samurai bonds as more Japanese investors are focusing on such instrument to secure their target yield. Japan’s interest rates have remained low as Bank of Japan continues to maintain its easing policy. At the time of pricing the deal, the benchmark rates for the three-year and the five-year yen swap offer were at -0.11% and -0.12%, respectively.
By type of investors, the three-year bonds were allocated to asset managers at 47.2%, central public funds 32.4%, shinkin banks (deposit institutions) 7.2%, regional banks 5.6% and others 7.6%. Life insurance companies accounted for the bulk of the five-year bonds with 62.9%, while the regional banks took 21.4%, shinkin banks 1.4% and others 14.3%.
In executing the transaction, Eximbank chief general manager and CFO Harsha Bangari says the bank has been monitoring the Samurai bond market and has actively engaged with investors updating them on Eximbank’s business environment, including the Indian banking sector.
Eximbank managing director David Rasquinha says the transaction was upsized from the original targeted amount and captured a good demand from regional accounts as well as from key central investors.
Eximbank has been raising foreign currency facilities from the international debt capital markets, which constitute about 88% of the bank’s lendable resources as of March 31 2019, leveraging on its strong financials and sovereign rating.