RBL Bank Raises $350 Million In Its First International Bond Sale

RBL Bank has raised $350 million from overseas investors through its first-ever international bond issue. The bank, which is now majority-owned by Emirates NBD, received demand far exceeding the amount it eventually raised.

Investor bids at their peak crossed $2.2 billion, according to RBL Bank's treasury head Anshul Chandak. The strong response allowed the lender to price the bonds at a tighter spread than initially indicated.

Bond Priced At 120 Basis Points Above US Treasury

The five-year dollar bond was priced at 120 basis points above the five-year US Treasury yield. Initial guidance had indicated a spread of around 150 basis points.

With the five-year US Treasury trading at about 4.59%, the yield on RBL Bank's bond works out to roughly 5.79%. One basis point equals one-hundredth of a percentage point.

Chandak said around 75% of the demand came from long-only investors, including insurance and pension funds. Hedge funds and banks accounted for the remaining demand.

The money raised will support the bank's growth through its GIFT City operations and help extend the maturity profile of its liabilities.

Funds To Support FCNR(B) Deposit Business

Part of the proceeds will be used to refinance shorter-term borrowings that were taken to provide leverage against Foreign Currency Non-Resident (Bank), or FCNR(B), deposits.

Replacing short-term borrowings with funding of a longer maturity could help the bank better match its assets and liabilities linked to these deposits.

Earlier this month, RBL Bank said it had mobilised $3.4 billion in FCNR(B) deposits before the Reserve Bank of India's concessional swap facility closed on 31 August.

Loans extended by the bank's international banking unit against these deposits stood at $1.08 billion.

Moody's Rating Reflects Emirates NBD Support

Moody's rated the dollar bonds Baa2, one notch above India's sovereign rating of Baa3.

The rating reflects expectations that Emirates NBD could support RBL Bank if required. The Dubai-based banking group acquired a controlling 60% stake in RBL Bank in June through an investment of around ₹26,000 crore.

The transaction was the largest foreign direct investment in an Indian bank at the time. Moody's has said the majority shareholder's ownership and potential support strengthen RBL Bank's credit profile beyond its standalone assessment.

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