The Export-Import Bank of India (EXIM Bank) has raised $1 billion through a dual-tranche issuance of longer-duration U.S. dollar-denominated bonds, according to people familiar with the transaction.
Issuance details
The offering consisted of two equal tranches: $500 million in 10-year bonds priced at a yield of 5%, and $500 million in 30-year bonds priced at 5.75%. The 10-year notes were priced at 85 basis points over the corresponding U.S. Treasury yield, while the 30-year bonds were issued at a spread of 95 basis points over the 30-year Treasury.
EXIM Bank had initially guided investors to expect spreads in the range of 115 to 140 basis points over U.S. Treasuries. However, strong investor demand allowed the bank to tighten pricing significantly.
Analysts noted that the final pricing was relatively aggressive. Market estimates had suggested fair value for the bonds at spreads of 90 to 105 basis points. For the longer-dated tranche, analysts said the 30-year bonds could eventually trade at levels similar to the 10-year notes, placing fair value closer to a 105-basis-point spread.
The bonds will be listed in Singapore, London, and India. Proceeds from the issuance will be used to meet financing requirements, including funding overseas investments and supporting the import of capital goods.
First bond issuance of the year
EXIM Bank’s transaction marks the first bond issuance in India this year.
Separately, strong investor appetite was also seen in the domestic bond market this week, with Adani Enterprises reporting robust demand for its third public bond offering. The company planned to raise approximately $111 million through bonds with maturities of two, three, and five years. The issue was oversubscribed on its opening day, with bids exceeding twice the offering size, and the subscription is expected to close ahead of schedule.
Lead managers for the Adani issuance included Nuvama Wealth Management, Trust Investment Advisors, and Tip Sons Consultancy Services.
Market outlook
Market participants caution that Indian bonds may have limited upside. Structural shifts in household savings toward equities, along with changes in banks’ investment rules, are weighing on demand for long-term debt. Yields are expected to remain in the 6.5% to 6.75% range this year, suggesting limited room for further declines from current levels.
