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IFR-Axis Bank bonds widen as retap offers 20bp pick up
August 21, 2012 / 5:42 AM / 5 years ago

IFR-Axis Bank bonds widen as retap offers 20bp pick up

HONG KONG, Aug 21 (IFR) - The outstanding 2017 bonds of Axis Bank have widened by some 10bp after the bank announced it was reopening the issue with a 20bp initial concession.

Just before the announcement the bank’s bonds were trading at T+385bp/370bp but widened to T+395bp/380bp.

The Axis Bank transaction is coming close on the heels of a USD3.35bn funding spree in the dollar market by Indian banks over the past four weeks. Axis, India’s third biggest private lender announced the retap of its 5.125% bonds due September 5, 2017 with a guidance of T+405bp.

The bonds were originally priced at T+440bp after announcing an initial price talk of T+450bp.

By offering a wide concession, the bank seems to be hoping to generate the level of oversubscription seen in three bank bond deals last week, which were all at least five times covered.

The reopening is coming under the Reg S format even though the original deal in late Feb was under the Reg S/ 144a format. The choice for a Reg S only format is similar to what Sinopec did two weeks ago, when it retapped its 10-year Reg S/ 144a bond with a Reg S only deal that was later fully fungible into the new one.

This allowed the company to speed up the process and take advantage of a window of opportunity, whereas if had made the choice for a 144a it would have taken longer to tap. The reopening of Axis, though, is immediately fungible.

For the retap, Axis has added Bank of America Merrill Lynch to the leads on the original deal, which were Barclays, Citigroup, HSBC, JP Morgan and Standard Chartered.

The deal is a part of its euro2bn MTN programme and is due to price as early as today.

There has been a rush of dollar bond issues from the subcontinent after State Bank of India opened doors for more credits from the region but interestingly the concession to issue these bonds has only narrowed.

After State Bank of India paid a 25bp new issue concession to reopen the dollar market for Indian issuers in late July with a USD1.25bn Global, that concession has eroded completely. Last week, Indian Overseas Bank and Union Bank of India offered a scant 2bp, while ICICI Bank priced an eye-popping 12bp through its curve.

Meanwhile, another Indian issuer is in the market today, IDBI Bank, but it is looking to price a Singapore dollar denominated deal in a 3-year tenor. Initial price talk on that bond is at 4%.

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