Public sector lender Bank of Maharashtra has successfully concluded its debut international bond issuance of $500 million with a 5-year maturity in a single tranche. According to reports from The Hindu BusinessLine, the debt instrument received an overwhelming response from international investors, with the order book reaching nearly three times the issue size. This marks the bank's entry into the international debt markets and represents a significant milestone in its growth strategy. The strong response reflects the confidence reposed by the international investor community in the bank's paper, as stated by Bank of Maharashtra in its official statement.
The issuance comprises five-year US dollar-denominated Senior Unsecured Notes, issued through the bank's IFSC banking unit under its $500 million medium-term note programme. As reported by The Hindu BusinessLine, the bonds carry a coupon of 6.112% and were priced at a spread of 130 basis points over the five-year US Treasury. The strong investor response allowed Bank of Maharashtra to tighten the pricing from its initial guidance, with the final spread 25 basis points lower at 105 basis points. The bonds are rated BBB by S&P and BBB- by Fitch Ratings and come under the Reserve Bank of India's concessional swap window to reduce hedging costs.
The proceeds will be used to meet funding requirements at the bank's India head office and foreign branches, as well as for general corporate purposes. According to the bank's statement reported by The Hindu BusinessLine, this issuance exhibits yet another important milestone in the bank's journey of more than 90 years. The successful entry into international debt markets provides Bank of Maharashtra with access to diversified funding sources and demonstrates the bank's ability to attract international investor confidence. The 3x oversubscription indicates strong demand for the bank's debt instruments in the international market, as noted in the bank's official statement.
The latest issuance comes amid increased activity by Indian banks in the international debt market, with State Bank of India, Bank of Baroda, Canara Bank and Union Bank of India also raising funds through dollar bonds this year. As reported by The Hindu BusinessLine, Indian banks have raised around $13 billion through dollar bonds since June, when the Reserve Bank of India introduced the swap window to support foreign currency borrowing. The issuance gives Bank of Maharashtra access to a wider pool of international investors while diversifying its funding sources, reflecting the bank's strategic positioning in the evolving banking landscape.
