Bank of Baroda Raises $700 Million From Overseas Bond Market
Bank of Baroda has returned to the international bond market after more than seven years, raising $700 million from foreign investors through three-year and five-year bonds.
The PSU bank raised $400 million through three-year bonds priced at 90 basis points above US Treasuries, while another $300 million was raised through five-year bonds at a spread of 100 basis points.
What stands out is the demand. The combined order book reportedly crossed $2.7 billion, nearly four times the amount Bank of Baroda eventually raised. Investors included global asset managers, pension funds and other institutional investors.
Strong demand also allowed the bank to price both bonds tighter than its initial guidance. This indicates that overseas investors were willing to accept relatively lower yields to gain exposure to the bank.
The bonds will be issued through Bank of Baroda’s International Financial Services Centre Banking Unit at GIFT City. Interestingly, the fundraising came just after SBI raised $500 million through a five-year international bond issue.
For investors, overseas fundraising by large PSU banks is worth tracking. Strong foreign demand can reflect confidence in the banks’ credit quality and India’s broader banking story, while also giving lenders another source of capital beyond domestic markets.
Learning Outcome: When a bond issue receives demand several times larger than the amount being raised, it can indicate strong institutional appetite. Pricing and spreads over government bonds are equally important when judging the strength of the issue.