The transaction, conducted through the bank’s GIFT International Financial Services Centre, was oversubscribed by more than 2.5 times, the bank said.
The issue was priced at 125 basis points above the five-year US Treasury bond and received strong demand from investors in Asia, at a semi-annual coupon rate of 4.89%. The benchmark US five-year bond bond was trading at 3.62% on Wednesday.
The bonds, which will mature after five years on Sept. 11, 2029, carry a semiannual coupon of 4.896%, the bank said in a regulatory filing with the stock exchanges.
One basis point is equivalent to 0.01 percentage point. Around 75% of the issue was snapped up by investors from Asia. “Demand was strong and the issue was subscribed almost four times with bids up to $1.15 billion, helping the bank to reprice from its initial guidance of 155 basis points. An interesting feature of this issue was the strong bids from a couple of state-owned banks for Canara, indicating that dollar liquidity for Indian lenders remains strong,” said a person familiar with the issue. ET had reported about the impending Canara issue in its August 8 edition. For Canara, the funds raised from this bond sale will help it diversify its funding resources to meet corporate borrowing demand from abroad. “The issue was widely subscribed by investors from Asia, the Middle East and Europe, demonstrating the strong confidence in Canara Bank’s creditworthiness. This achievement underlines the trust that investors have reposed in our institution,” said K Satyanarayana Raju, CEO, Canara Bank.
This is the bank’s first bond issue in more than five years. In March 2019, the bank had sold a five-year bond, raising $400 million through its London branch. The bond was priced 170 basis points above the US Treasury bond with a fixed coupon of 3.87% and was listed on the Singapore Stock Exchange.
The latest issue was subsidized at the bank’s GIFT City branch in Gujarat and marketed to investors in Singapore, Hong Kong and London.
“We are delighted with the launch and pricing of this transaction, which enabled us to achieve a 30 basis point adjustment between the initial and final price. The issue was widely subscribed by investors from Asia, the Middle East and Europe,” Canara Bank Managing Director K Satyanarayana Raju said.
Some 72 investors participated in the transaction, of which 73% were Asian investors and the rest European investors. More than 41% of the transaction was in the hands of fund managers and insurance companies.
The issuing bankers were DBS Bank Ltd of Singapore, Mitsubishi UFJ Financial Group of Japan and BNP Paribas of France.
Other Indian public sector banks are also preparing issues and are gearing up to raise money in the overseas market.
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