SINGAPORE—Bank of India is offering $500 million in 5 1/2-year dollar bonds, ushering in what market participants believe will be a rich pipeline of issuance from the south Asian nation.
The bond sale comes a week after Standard & Poor's Ratings Services restored its stable outlook on ratings of India's government and banks, a move which in effect removed the imminent danger of a downgrade, which may have made some investors wary of buying Indian bonds.
Bank of India's offering is part of a plan to raise $2 billion over the medium term. The state-owned bank will use the proceeds to fund its international operations and for general corporate purposes.
The investment-grade bank has set final yield guidance between 2.35 percentage point and 2.40 percentage point over comparable U.S. Treasurys, narrower than initial guidance of around 2.45 percentage point, people familiar with the deal said. Barclays Capital, Citigroup, Deutsche Bank, HSBC, and Royal Bank of Scotland Group are in charge of the deal.
The bank was expected to price the bond later Wednesday.
The bank met investors in early February to market the bond but didn't proceed with an offering then given unstable markets spurred by concerns over Greece's debt problems.
Other Indian banks, including Bank of Baroda, which last month walked away from a bond deal to avoid paying high interest rates, are among those expected to tap the market this year.
Japanese bonds
Yields on Japanese government bonds fell Wednesday and drop further on expectations that state-owned financial conglomorate Japan Post Holdings Co. could become a bigger buyer of public debt.
The government announced Wednesday that it plans to keep a significant stake in Japan Post to help it expand its business. At the same time, the limits on how much money customers can put into postal savings accounts and insurance will be raised.
The financial institution has assets totaling about 300 trillion yen and is a major buyer of JGBs. With its earnings increasing, expectations are rising that Japan Post will likely boost its bond holdings, analysts say.
The benchmark 10-year yield eased 0.005 percentage point to 1.34%.
Thursday, the government is slated to sell 2.6 trillion yen of two-year bonds with an expected coupon of 0.2%, higher than the current yield.
