HSBC, I-Sec bag ADB's Rs 500 crore bond mandate

HSBC and I-Sec have been appointed as lead arrangers for Asian Development Bank's (ADB) first rupee bond issue.

The Rs 500 crore bond issue is slated to hit the Indian bond market by March, and the 10-year bonds will be finely priced.

As ADB is rated AAA by all the three global rating agencies, Standard & Poor's, Moody's and Fitch, the industry expects the bonds to be priced close to the yield on 10-year gilt, currently ruling at 5.26 per cent. The coupon rate on the bonds are likely to be linked to the London inter-bank offer rate.

The decision on the pricing and timing of the issue, however, is under process, merchant bankers said. Bank of India and Union Bank of India have been appointed as co-arrangers to the first-ever domestic currency issue by any multi-lateral agency. ADB is raising the rupee debt to on-lend to Indian corporates engaged in the core sector.

ADB has received all regulatory approvals from the ministry of finance, Reserve Bank of India and the Securities and Exchange Board of India for floating and listing the bonds.

The on-lending of rupee loans by ADB to Indian companies is similar to the assistance World Bank gives to Indian entities through its private lending arm, International Finance Corporation (IFC).

While ADB will be the first 'supra-national' to tap the Indian bond market, other multilateral agencies such as World Bank and IFC are also expected to float rupee bonds when the time is right.