August 21, 2012 / 5:47 AM / 5 years ago

IFR-Books growing strongly on IDBI's debut SGD 3y deal

SINGAPORE, Aug 21 (IFR) - Books are heard to be building steadily on the first Singapore-denominated bond offering from [IDBI Bank]. Orders of over SGD200m (USD160m) had flowed in within an hour of launch of the three-year Reg S and are still growing with keen interest from both institutional investors and private banks.

No rebate is being given to PBs, since this is a high-grade name that is expected to bring in the crowds.

Given the encouraging interest, pricing is expected to be compressed from an initial guidance of 4% area. If pricing comes at 4%, it will yield a high premium of over 60bp on absolute yield terms over the closest comp of ICICI’s (BBB-/BBB-) 3.8% 2016s, which are now yielding 3.36% or a spread of 262bp over Singapore dollar SOR.

In terms of spread, IDBI is providing an attractive spread of about 335bp over SOR.

Although ICICI is also an Indian financial institution and is similarly rated, its Singapore dollar bond with a life of 3.5 year left, is only SGD60m. Another potential comp is VTB Bank’s (Baa1/BBB/BBB) recently issued SGD400m due 2015s at 4.00%, which would put IDBI’s initial guidance inside that coupon if it prices its paper at the tight end of the IPT, since IDBI is rated two notches below VTB.

IDBI is going against the current trend of Indian financial institutions hitting the US dollar space by trying to tap the Singapore dollar market. A key aim is to diversify its currency and investor base, but the local market is awash in liquidity as last week’s deals showed.

The three deals from NTUC Income, Mapletree Commercial Trust and CapitaMalls Asia brought books totaling SGD15bn, of which SGD9bn alone was for NTUC Income.

The senior unsecured notes will be issued via IDBI’s Dubai branch (Baa3/BBB-/BBB-). There will be a put at 100% if direct and indirect Government of India shareholding falls below 51%.

Pricing is as early as today. DBS, HSBC and Standard Chartered are joint leads.

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