ADB's 10-year rupee debt oversubscribed two times

The bond market gave an overwhelming response to Asian Development Bank's first rupee bond issue today.

The Rs 500-crore 10-year debt issue, which was oversubscibed by two times, carries a coupon rate of 5.4 per cent payable semi-annually.

This will yield 17 basis points over the ten-year benchmark paper, 7.37 per cent 2014. The bond issue has received good response from banks, institutional investors, mutual funds and insurance companies despite the issue being finely priced via book-building route.

HSBC and ICICI Securities acted as the lead arrangers for the issue with Bank of India and Union Bank of India participating in the syndicate as co-arrangers.

As ADB is rated AAA by all the three global rating agencies, Standard & Poor's, Moody's and Fitch, the industry had anticipated the bonds to be priced at 15-20 basis points close to the yield on 10-year government paper, which closed at 5.25 per cent today. The ADB bonds, treated as non-SLR investments by the banking sector, will be listed on the stock exchanges.

ADB has raised the rupee debt to on-lend to Indian corporates engaged in the infrastructure sector.

The multilateral agency has proposed to step up its lending in India to $2 billion annually with special focus on power, roads and railways.

The on-lending by ADB is similar to the assistance World Bank gives to Indian entities through its private lending arm, International Finance Corporation.