UTI raises $150 mln worth Upper Tier II bonds in international mkt

New Delhi, Aug 6 (UNI) UTI Bank said it has raised 150 million dollars through 15-year subordinated Upper Tier II bonds in the international market, becoming the first Indian bank to raise such capital.

The bank has already established its MTN programme and had the Upper Tier II structure built into the programme, a company statement said.

Under Basel II norms, Indian banks would need to shore up their capital on account of providing for market risk, as well as to support the expansion of their balance sheet.

In January this year, the Reserve Bank of India had permitted banks to raise hybrid capital (Tier I and Upper Tier II) in Indian Rupees. Subsequently, on July 21, 2006, the banks were permitted to raise this capital in foreign currency too.

UTI pioneered the market for regulatory capital for all other Indian banks to follow, and reopened Asian Bank Capital Market post recent market volatility The transaction is priced with a fixed rate coupon of 7.25 per cent, equivalent to a spread of 231.5 bps over the 10 year US Treasury, or a yield of 7.273 per cent.

The bank had a highly successful 3 day roadshow in HK, Singapore and London.

Its total order book is approaching 1 billion dollars, reflecting a massive oversubscription of 6 times.

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