Canara Bank foreign float oversold five times

Canara Bank has received a phenomenal $1.3 billion worth of subscriptions against the offering of $250 million to augment its upper tier-II capital under the mid-term note (MTN) programme.

This is the first time that Canara Bank is venturing to tap the global markets in the last one hundred years of its existence. However, the bank will issue allocation letters to investors for only $250 million.

Canara Bank Chairman and Managing Director M B N Rao said, "The transaction was well received by a cross section of investors across Asia, Europe and offshore US accounts. The participation of 118 investors ranging from banking, insurance companies and funds is a strong endorsement of the interest evinced by global investors in India's economic growth and the banking sector."

The joint lead managers and book runners, ABN Amro, Citigroup, HSBC and UBS, were able to position Canara Bank as the top-notch nationalised bank in India, he 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 is the first tranche of the $1 billion, for which the bank has received Moody's rating of Baa2, a notch above the country's sovereign rating, the chairman said.

Post-issue, the bank is expected to have a CAR of over 13 per cent, which would help the bank meet the international credit requirements of its customers and its long-term credit needs and thereby increase its business volumes.