Yes Bank, two other peers withdraw dollar debt plan, bankers say
MUMBAI: India’s Yes Bank has withdrawn a plan to raise U.S. dollar debt after investors demanded higher yields amid a wave of supply from Indian lenders, three merchant bankers said on Tuesday. Yes Bank, which is 24.9% owned by Japan’s Sumitomo Mitsui Banking Corp, had planned to raise around $500 million through three-year dollar bonds, and had appointed bankers for the issue last week. “After…
India's Yes Bank has abandoned its plan to raise U.S. dollar debt as investors demanded higher yields due to a surge in supply from Indian lenders, according to three merchant bankers. The bank, which is 24.9% owned by Japan's Sumitomo Mitsui Banking Corp, had intended to issue around $500 million worth of three-year dollar bonds and had engaged bankers for the issuance last week.
The decision came after the central bank extended the closure of the dollar deposit window, prompting investors to seek higher yields of 30-40 basis points above the norm. A banker requested anonymity as they were not authorized to speak with the media. Yes Bank did not respond to a Reuters inquiry for clarification. Banks have been rushing to finalize their dollar bond sales, with most of the funds expected to be used to provide leverage to customers depositing them under the RBI's discounted dollar deposit scheme.
The deadline for hedging such deposits is set for August 31. Market intelligence firm CreditSights had estimated the fair value for the proposed notes at a spread of 170-180 basis points over U.S. Treasuries, translating to a yield of approximately 6.0350%-6.1350%. Analysts noted that Yes Bank's peers, Federal Bank and RBL Bank, had also canceled their planned dollar bond issuances, citing the lack of time for disclosures for the public route and the high cost of private placements.
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