State-run Union Bank of India has hit the global debt market to raise around $500 million through bond issuance, said two merchant bankers working on the issue.

This has comes days after successful bond issuances by State Bank of India last week and a dozen of corporates in recent months.

“We have launched roadshows in the leading Asian and European finance centres on behalf of Union Bank of India last week, as part of the bank’s plan to launch a benchmark issue.

If the market condition is conducive, we will close the sale programme this week,” the merchant bankers told PTI today.

They also said, this is part of the medium term note (MTN) programme of the city-based bank and the fund will be deployed to meet its overseas fund obligations.

The bank’s head D Sarkar could not be reached for comments immediately.

It can be noted that last Friday, SBI set a new benchmark in bond pricing by selling $1 billion worth fixed rate five-year senior unsecured bonds at coupon 3.25 per cent, 87 basis points (bps) lower than the coupon it is paying to the bondholders of its previous $1.25-billion issue last July.

So far 11 companies through 13 issuances raised a whopping $7.5 billion this year, as rupee funds remain too costly at around 12-14 per cent, while foreign funds are much lower.

The highest pricing of these debts is just under 6 per cent, while the lowest coupon is a paltry 3 per cent that HDFC Bank is paying to its investors for its $500 million issue sold this January.

Last week, Essar Steel said it would dollarise its Rs 20,000 crore rupee loans if the RBI allows doing it. According to I-bankers, RIL, ONGC Videsh and Tata Steel are also planning to borrow abroad.

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