Manipal-based public sector lender Syndicate Bank is planning to hit the global capital market with its $500-million medium-term note offering in September.
The bank is giving shape to overseas fund raising plans after successful fund raisings by State Bank of India ($1.25 billion) and Export and Import Bank of India ($500 million) in July.
This would be its second offering for MTN, a debt note that usually matures in five to 10 years. Syndicate Bank had raised $500 million through MTN in May 2011. It issued bonds having tenure of 5.5 years with coupon of 4.75 per cent.
M G Sanghvi, its chairman and managing director, told Business Standard the bank is in the process of picking up managers for the proposed issue. The decision to float the issue would depend on market conditions then.
In July the country’s largest lender, State Bank of India, mopped up $1.2 billion through five-year notes, drumming up subscriptions for $6.8 billion. The bonds carried a coupon of 4.125 per cent. Export Import Bank of India also raised $500 million via MTNs. The bonds carry a coupon of four per cent. Chennai-based Indian Overseas Bank is also planning to tap the market to raise $500 million through MTN.
A Syndicate Bank official said the bank has already deployed funds raised from the previous MTN issue. At present, there is demand for international currency funds from Indian companies but banks are able to take only small exposure (credit upto $10 million).
After fresh fund raising, Syndicate Bank will be in a position to disburse big-ticket loans at finer rates. The bank’s only foreign presence is in London. The branch is active in money market operations, besides treasury and foreign exchange. It also focuses on syndications and external commercial borrowings. With Indian companies going global, the branch finds new opportunities.
The total business of the branch stands at £3,697.6 million as at March 31, against £3,078.7 million as at March 31, 2011.