Union Bank of India taps dollar debt market after 12-year hiatus

Mumbai's Union Bank of India has made a significant move by issuing $600 million worth of U.S. dollar-denominated bonds for the first time in over twelve years. This comes through its Dubai branch, with two merchant bankers confirming the information on Tuesday. The bank secured the funds in the form of three-year and five-year bonds, with respective coupon rates of 5.23% and 5.4170%.

The three-year bonds were priced at 93 basis points above U.S. Treasuries, while the five-year bonds were priced at 102 basis points above Treasuries. This is a notable deviation from the bank's initial expectations of 120 bps and 130 bps.

The bank's decision to enter the dollar debt market follows the central bank's announcement of a discounted hedging facility, which has led to a decrease in borrowing costs for financial institutions. In the past month, India's top two state-run banks, State Bank of India and Bank of Baroda, have also raised $500 million and $700 million respectively through public sales. Additionally, Federal Bank has recently tapped the dollar debt market via GIFT City.