Axis Bank latest to tap overseas bond market

Axis Bank has proposed to raise foreign currency senior unsecured notes under the bank’s € 2 billion medium term notes (MTN) programme. The proposed issuance is in addition to the $500 million senior notes issued by the bank in March 2012 under the MTN programme and is expected to be finalised later on Tuesday.

The notes will be fungible and consolidated with the 5.125% notes due 2017, issued on March 5, 2012, to form a single series.

The series of fund raising plans by the Indian banks started with State Bank of India issuing five-year dollar bonds of $1.25 billion at 4.125 per cent, which is 375 basis points (bps) over Treasury of comparable tenor. The other banks to tape the overseas market includes ICICI Bank, Indian Overseas Bank, Exim Bank and Union Bank of India for $750 million, $500 million, $500 million and $350 million respectively.

Rating agency Fitch has rated the notes at the same level as Axis Bank’s Long-TermForeign Currency Issuer Default Rating (LT FC IDR) of 'BBB-', as they will constitute direct, unsubordinated and senior unsecured obligations of the bank, and will rank equally with all its other unsecured and unsubordinated obligations.

Standard & Poor's said that its 'BBB-' issue rating on the proposed issue of senior unsecured notes by Axis Bank would not get affected by the bank's proposal to upsize the issue.

Other banks that are expected to tap the overseas market include Bank of Baroda, Bank of India, Syndicate Bank and IDBI Bank.

``We are constantly looking for a conducive investment climate overseas and would issues notes as per the sentiment there,’’ said NS Venkatesh, Head Treasury, IDBI Bank. The IDBI Bank is looking to close the issue at the earliest.

(Edited by Prem Udayabhanu)

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