INDIA
DEBT CAPITAL MARKETS
› SBI GOES GREEN
STATE BANK OF INDIA, acting through its London
branch and rated Baa2/BBB–/BBB–, priced
its debut offshore Green bond issue, a
US$650m five-year senior unsecured
offering.
The Reg S issue priced at Treasuries plus
165bp, inside initial guidance of 185bp area.
India’s largest state-owned bank
mandated the deal in early July, but waited
for a suitable market window in the face
of emerging markets volatility and the
slumping rupee.
Its patience paid off. Fair value was
seen in the region of Treasuries plus
157bp, taking SBI’s 2024 bonds, which
were trading at 162bp, as a reference and
subtracting 5bp for the shorter maturity.
That pointed to a new concession of around
8bp, versus an estimated 15bp for the like-
rated Power Finance Corp trade last month.
SBI’s new issue tightened to Treasuries
plus 161bp at the Thursday open, before
rallying further to 158bp as Indian credit
was broadly 1bp–3bp tighter.
Final orders exceeded US$1.25bn from
114 accounts, allowing the deal to be
increased from a target size of around
US$500m. Asia booked 52% of the bonds,
Europe and the Middle East a combined
45%, and offshore US investors took 3%.
The strong European take-up was partly
attributable to the deep investor base there
for Green bonds.
By investor type, banks bought 41%, fund
managers 30%, insurers 17%, private banks
8% and public sector investors 4%.
Proceeds will be used to invest in eligible
green projects. The notes have been
certified as Green bonds by the Climate
Bonds Initiative.
There is a change of control put option at
101% if the aggregate of direct and indirect
stakes held by the government of India in
SBI falls below 51%.
DBS Bank, First Abu Dhabi Bank, HSBC
(B&D), MUFG and SBI Capital were joint
bookrunners.
› KIIF APPOINTS TWO FOR MASALA MTN
The KERALA INFRASTRUCTURE INVESTMENT FUND
BOARD has appointed Axis Bank and Standard
Chartered Bank as arrangers for a Rs50bn
(US$695m) Masala MTN programme.
KIIF was established to invest in large
infrastructure projects in the southern
Indian state of Kerala and is permitted to
issue rupee-denominated bonds overseas.
The government of Kerala is the
guarantor of the programme and the
notes will be listed on the Singapore stock
exchange.
On September 19, S&P and Fitch assigned
a BB rating with a stable outlook to the
MTN programme, highlighting the strong
link between the issuer and the state of
Kerala.
India eased restrictions on Masala bonds
last week when the government waived the
5% withholding tax on coupon payments
on offshore rupee bonds issued from
September 17 to March 31 2019.
The central bank has also scrapped a rule
preventing banks from supporting Masala
bonds as market-makers, a step that should
boost liquidity in the secondary market.
KIIF had planned its Masala MTN
programme before the easing of the rules,
said a source close to the plans. “The
amended rules will help issuer in terms of
lowering costs,” the source said.› CHOLAMANDALAN SELLS BONDS TO ADBCHOLAMANDALAN INVESTMENT AND FINANCE COMPANY
has raised Rs10.59bn from a placement
of bonds to the Asian Development Bank,
according to an exchange filing.
The non-banking finance company said it
issued the debentures at tenors of three to
five years.
Cholamandalan did not respond to a
request for further details on the pricing of
each tranche.
The funds raised will be used for
financing small road transport operators
and small and medium-size enterprises
which need long-term capital.
The funding to SRTOs and SMEs is crucial
for the Indian economy as it will boost
investments and employment, Anshukant
Taneja, principal investment specialist for
private sector operations from ADB, said in
a release.› NEEPCO EYES RS3BN SEVEN-YEAR BONDSNORTH EASTERN ELECTRIC POWER CORP (Neepco) is
planning to raise up to Rs3bn from a seven-
year bond issue, according to a market
source.
It has asked investors to place bids on
the BSE’s electronic bidding platform from
11:30am to 12:30pm on September 24.
The notes have a staggered redemption
every six months from year 5.5 onwards
and have a call option after three years.
The interest on the bonds will be paid semi-
annually.
Icra and Care have assigned AA ratings to
the notes.In November last year, Neepco raised
Rs5bn from eight-year bonds at 7.68%,
payable semi-annually.
Neepco is yet to make an official
announcement on the plan.› YES BANK PRINTS T2 NOTESYES BANK has raised Rs30.42bn from Tier 2
bonds at 9.1164% for a tenor of 10 years via
a private placement, according to a filing
on exchanges.
The private sector bank’s T2 notes were
allotted Monday.
Care and India Ratings have assigned
AAA and AA+ ratings to the notes.
The bonds will be listed on the Bombay
Stock Exchange.› OPAL PLANS RS10BN BONDSONGC PETRO-ADDITIONS LTD, or Opal, is planning
to raise a total of Rs10bn from three and
five year domestic bonds, according to a
market source.
It is targeting Rs2.5bn plus a greenshoe
option of Rs7.5bn and is planning to issue
the bonds on September 26.
The notes have a letter of comfort from
ONGC, the source said.
Care has assigned a AAA (structured
obligation) rating to Rs30bn Opal long-
term instruments, which takes into
consideration credit enhancement in the
form of the LoC from ONGC.
Opal is yet to make an official
announcement on the bond sale plans.EQUITY CAPITAL MARKETS
› AAVAS SETS PRICE RANGE FOR IPOHousing finance company AAVAS FINANCIERS
is targeting raising Rs17bn (US$234m)
through an IPO having set a price range of
Rs818–Rs821.
In a public notice, the company said
the offer would be open for subscription
between September 25 and September 27.
The top of the range implies a price to
book value multiple of 5.23 versus the
industry average of 5.92.
Primary shares of Rs4bn and 16m
secondary shares will be sold in the
IPO. The vendors include controlling
shareholders Lake District Holdings and
Partners Group and Kedaara Capital.
Aavas, formerly called AU Housing
Finance, provides housing loans mainly
in the states of Rajasthan, Maharashtra,
Gujarat, Madhya Pradesh and Haryana.
The company earned a net profit of
Rs929m in the financial year that ended
March 31 2018, up from Rs571m in the