Canara Bank secures $1.3 billion in the global debt market

Canara Bank's offering of $250 million to augment its upper tier-II capital under the mid-term note (MTN) programme, its first international fund raising foray, has been oversubscribed five times to the tune of USD 1.30 billion by global institutional investors. This is the first tranche of the $1 billion for which the bank has received Moody's rating.

Bank has also set a new benchmark securing the finest pricing by an Indian financial institution in the global debt market. The issue got a pricing of 129 basis points over six months’ London Inter-Bank Offered Rate (Libor), but the effective pricing after a fixed-to-floating rate swap was 125 points over Libor. The joint lead managers and book runners were ABN Amro, Citigroup, HSBC and UBS.

According to Canara Bank Chairman and Managing Director M B N Rao, The transaction was well received by a cross section of investors across Asia, Europe and offshore US accounts. The participation of 118 investors ranging from banking, insurance companies and funds is a strong endorsement of the interest evinced by global investors in India’s economic growth and the banking sector.

Post-issue, the bank is expected to have a CAR of over 13 per cent, which would help the bank meet the international credit requirements of its customers and its long-term credit needs and thereby increase its business volumes.

Canara Bank is the third largest bank in India in terms of total deposits and advances and fourth largest in terms of assets size with over 27 Million customers in its fold. The Bank has plans of opening 21 branches in key international financial centres.

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