New Delhi/Singapore : Union Bank of India, a state-owned lender, is planning to sell bonds denominated in Swiss francs for the first time as it seeks cheaper funding sources, according to Executive Director S.C. Kalia.
Officials representing the Mumbai-based lender are in Zurich to negotiate the sale, and the tenor and amount have yet to be decided, Kalia said in a phone interview from Mumbai yesterday. Union Bank hired Barclays Plc to help organise meetings with investors, according to a person familiar with the matter who asked not to be identified before a public announcement.
"We are going by the assumption that Swiss franc- denominated debt can be raised at cheaper rates than dollar or euro-denominated debt," Kalia said. "The sale can be expected very soon."
Revival
Union Bank would be the first Indian company to sell Swiss franc bonds since July 2006, when computer network provider GTL Ltd. issued 43 million francs (Dh160 million) of convertible notes, according to data compiled by Bloomberg. Indian dollar-bond yields are headed for their biggest monthly increase since the height of the European debt crisis in May, according to HSBC Holdings Plc indexes.
Rising costs could put a brake on the record pace of issuance in the US currency, Mitul Kotecha, the head of global foreign exchange strategy at Credit Agricole CIB, said this week.
The last Indian bank to sell securities denominated in Swiss francs was IDBI Bank Ltd in March 1987, Bloomberg data show. Union Bank has $1.7 billion (Dh6.2 billion) of dollar- and rupee- denominated bonds maturing by the end of 2049, the data show.
