Bank of Baroda to raise $500 million via medium-term notes this quarter

Bank of Baroda (BoB) is planning to raise $500 million by the way of medium-term notes (MTN) sometime in February-March.

“If we go for MTN, it could be around $500 million. But we have not decided the timing of the issue. It will depend on market conditions,” said M D Mallya, chairman and managing director of the bank. But a top official said that the notes will be raised in this quarter itself to fund the bank’s overseas assets growth.

The fundraising is a part of BoB’s MTN programme of up to $1.5 billion which was announced in March 2007. Under this, the bank will issue foreign currency bonds in the international market from time to time depending on funds requirements in its overseas branches.

In March 2010 the bank through its London branch had raised $350 million by the way of five-and-a-half year senior unsecured bonds with a coupon of 4.75%. So far $650 million has been raised out of the $1.5 billion MTN programme.

Last week Bank of India had said that it plans to raise $500 million through MTN this quarter. We may see more banks announcing their MTN issues. “The appetite for Indian papers remains good in the international market and there is a significant difference in the coupon rates. The domestic cost of borrowing is higher compared with the international market,” said Ramit Bhasin, head of markets (India) of global banking and markets division, Royal Bank of Scotland N.V.

On Friday BoB reported a 28.4% year-on-year growth in net profit for the third quarter ended December 31, 2010, at Rs1,068.88 crore.
For the nine months ended December 31, the net profit grew 37% Rs2,947.34 crore on year.

Total global business of the bank grew 31.6% year on year to Rs488,721 crore as on December 31, while global deposits rose 30.9% to Rs281,512 crore during the same period.