Union Bank Raises $600 Million Through Dollar Bond Sale After 12-Year Gap
The state run lender returns to the US dollar debt market as Indian banks accelerate overseas fundraising ahead of the RBI hedging window deadline.
MUMBAI, Aug 25: Union Bank of India has raised $600 million through a public sale of US dollar denominated bonds, marking the state-owned lender’s return to the international debt market after more than 12 years.
The fundraising was conducted through the bank’s Dubai branch, with $300 million raised through three year bonds and another $300 million through five-year securities.
The three-year notes carry a coupon of 5.23%, while the five year bonds have a coupon of 5.417%. The securities were priced at spreads of 93 basis points and 102 basis points over US Treasury yields, respectively, below the bank’s initial guidance.
Union Bank is the third state run lender to access the dollar bond market through a public issuance since the Reserve Bank of India introduced a discounted hedging facility in June.
State Bank of India and Bank of Baroda have also raised funds through overseas dollar bond offerings, while other Indian lenders have tapped international markets through public and private placements.
The fundraising comes as banks seek to take advantage of the RBI’s discounted dollar deposit scheme before the hedging facility closes on August 31.
Indian lenders have significantly increased overseas borrowing in recent months. Banks raised a combined $11.25 billion through bond issuances between June and August, reflecting strong demand for foreign currency funding.
The latest issuance also highlights the growing role of overseas debt markets in supporting Indian banks’ funding requirements amid changing global financial conditions.
