Union Bank of India has started meeting investors, seeking to raise at least 125 million Swiss franc ($128.5 million) in its first sale of debt, denominated in the European nation’s currency.
The Mumbai-based bank is selling 3.25 per cent, 4.5-year bonds.
Union Bank is selling Swiss franc bonds to reduce costs and expand its investor base. The yield on Swiss government debt maturing in March 2016 fell three basis points to 1.09 per cent today, according to prices on the SIX Swiss Exchange in Zurich. That compares with 5.12 per cent for dollar-denominated debt and 8.2 per cent for local-currency obligations, according to HSBC Holdings Plc indexes.
Union Bank may price the notes to yield 200 bps more than the swap rate. A basis point is 0.01 percentage point. Barclays is helping sell the debt. The bonds mature on July 8, 2015.
Indian companies more than tripled the sale of foreign-currency bonds to $8.7 billion in 2010 as the central bank drove up rupee borrowing costs with six interest-rate increases. This compares to record sales of $9.3 billion in 2007.
Union Bank officials met investors in Zurich, Geneva, Lausanne and Vaduz during November 18-20. Markets in Switzerland are stable and there’s still appetite for emerging-market bonds, General Manager V K Khanna said in a January 4 interview.
Rural Electrification Corp, India’s state-controlled lender to power projects, is likely to sell $500 million of bonds on January 18, reviving a delayed sale, Finance Director Hari Das Khunteta had said on December 29. It hired Credit Agricole CIB, Royal Bank of Scotland Group and Standard Chartered to help manage the sale.