Canara Bank's $ 250 M offering meets with resounding success
Bangalore, Nov 21 (UNI) Canara Bank's maiden international fund raising foray to garner US Dollar 250 million in upper tier-II offering under MTN programme has met with phenomenal success, with the offering oversubscribed five times notching up a subscription of 1.3 billion Dollars from international institutional investors.
In the process, the bank had set a new benchmark securing the finest pricing by an Indian financial institution in the global debt market. ''The runners, ABN Amro, Citigroup, HSBC and UBS were able to position Canara Bank as the top notch nationalised bank in India in our debut deal getting oversubscribed five times,'' Bank Chairman and Managing Director M B N Rao said in a release here today.
He said the transaction was well received by a cross-section of investors across Asia, Europe and offshore US accounts.Participation by 118 investors, ranging from banking, insurance companies to funds, is a strong endorsement of the interest evinced by global investors in India's economic growth and the banking sector.
Mr Rao said the issue got a pricing of 129 basis points over six months London Inter Bank Offered Rate (LIBOR), but the effective pricing after a fixed to floating rate swap was 125 points over LIBOR. This was the first tranche of the one billion Dollar for which the bank had received Moody's rating of Baa2, a notch above the country's sovereign rating.
Post issue, the bank was expected to have a Capital Adequacy Ratio of over 13 per cent which would help the bank in meeting the international credit requirements of its customers and its long term credit requirements and thereby increase its business volumes.
Mr Rao said ''the funds have been raised without diluting equity and the rise in CAR should see us through to the middle of next year.'' The third largest bank in India in terms of total deposits and advances and fourth largest in terms of asset size with over 27 million customers, Canara Bank had set an ambitious business target of Rs 2,33,000 crore for the current fiscal. The bank had ambitious plans of opening 21 branches in key international financial centres.
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