Union Bank of India is planning the third dollar-denominated bond by an Indian borrower this week, as better-than-expected US retail sales and European growth figures eased concern the global slowdown is deepening. Bond risk in the Asia-Pacific region fell.
Union Bank is marketing $350 million of five-year notes to yield about 410 basis points (bps) more than Treasuries, a person familiar with the deal said, asking not to be identified because the matter is private. ICICI Bank Ltd, India's biggest private lender, sold $750 million of five and half years notes at a 400 bps premium yesterday, after Indian Overseas Bank sold a $500 million bond on August 13, data compiled by Bloomberg show.
“Indian banks are being opportunistic,” said Mark Reade, a credit analyst at Credit Agricole SA Bonds sold by lenders from the nation last month “are trading well in the secondary market so it makes sense that other Indian banks are coming to the market.”
The banks are the only Asian borrowers to offer dollar bonds this week as average spreads on debt from Indian companies narrowed to a 12-month low of 448.3 bps. Acco-rding to HSBC Holdings US retail sales climbed for the first time in four months and German and French growth figures beat forecasts, data released yesterday showed.
SBI sale
State Bank of India (SBI) ended a five-month pause for Indian lenders with a $1.25 billion bond on July 25, which was followed by Export-Import Bank of India with a $500 million note sale.
The yield premium on SBI's notes narrowed to 343 bps as of 12:40 pm in Hong Kong, from an issue spread of 375, BNP Paribas SA prices show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan borrowers outside Japan fell one basis point to 148 as of 8:49 am in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge has decreased 10 bps this month, according to data provider CMA. A basis point is 0.01 percentage point.
US retail sales climbed 0.8 per cent in July, Commerce Department figures showed yesterday. Economists projected a 0.3 per cent increase, according to the median forecast in a Bloomberg survey.
Germany's gross domestic product rose 0.3 per cent in the second quarter from the first quarter, more than the 0.2 per cent predicted by economists in a Bloomberg News survey. French GDP was unchanged in the quarter, better than the 0.1 per cent decline forecast by economists.
