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Bank of Maharashtra priced its debut, five-year bond raising $500 million Thursday at 130 basis points above the five-year US treasury. With the five-year US treasury at 4.80%, the bonds are likely to be priced around 6.10%. This is a big difference from August 24, when Union Bank of India raised $300 million by selling five-year bonds at 102 basis points above the five-year benchmark security. Back then, the instrument was trading around 4.39%, making a final yield of 5.41% on the bond. So far this year, dollar bond issuances from India have crossed $20 billion, mainly on the back of the concessional swap windows opened by the Reserve Bank of India (RBI) to support leverage programmes for foreign currency deposits. Read more: Paytm karo, back in vogue again: Can the stock reclaim IPO price after 5 years and 480% rally? To be sure, bankers still expect the total funds raised this year from overseas to top the record $22 billion garnered in 2021. However, the recent surge in US yields could change the math for issuers. "At these higher treasury levels, there could be some moderation in issuance activity, especially from issuers who are fixed-rate borrowers and who have access to onshore rupee liquidity, as dollar bonds on a post-swap basis may not be as attractive from a pricing standpoint as straight rupee financing," said Vinod Venkatesh, co-head of financing solutions, HSBC India. Read more: Retail investors pull Rs 5,674 crore from stocks, invest Rs 12,618 crore into IPOs in July-August Benchmark US treasuries have risen sharply in the last month in anticipation of a Fed hike, which was delivered on Wednesday. Yield on the benchmark 10-year US Treasury has increased beyond 5% for the first time in 19 years while the five-year bond was trading around 4.80% - the highest in more than three years as traders priced in higher interest rates. "The all-in cost for issuers has definitely gone up, but that is not all. Issuers will also look at the outlook for the market. The fact is that one big uncertainty is off the table with the US Fed hike," said a senior capital market executive at a foreign bank. "Issuers who need funds may now like to frontload and take the risk of fundraising off the table because going forward, no one can predict how high rates can go." Bankers say that Indian issuers will still look at the spread over the US treasuries and weigh in future risks while deciding on issuances. Venkatesh from HSBC said his bank does not expect activity to stop completely. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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