PM plays down Moody's forecast

Prime Minister Manmohan Singh, talking to reporters at Rashtrapati Bhavan, where he was attending the swearing-in ceremony of Vice-President Hamid Ansari, today played down the Moody’s forecast of 5.5 per cent gross domestic product (GDP) growth in the current financial year. He expressed hope that it would be better than the 6.5 per cent recorded in 2011-12.

Earlier this week, Moody’s Analytics, the research unit of ratings agency Moody’s Investors Service, had cut India’s growth forecast to 5.5 per cent, citing a lack action from the government or the Reserve Bank, despite a broad-based slowdown and a poor monsoon.

The government is already under pressure of a looming ratings downgrade to junk, following the Standard & Poor’s April 25 revision of the long-term rating outlook of the country to negative from stable.

Asked to comment on Moody’s analysis of the Indian economy, Singh said: “It is a cause of concern, but one should not draw unwarranted conclusions.”

“The fundamentals of the Indian economy are strong. Investments and savings are among the highest in the world. I am hopeful we will do even better than the 6.5 per cent growth performance of last year,” he added.

Moody’s Analytics Senior Economist Glenn Levine had said: “There has been little policy response from either the Reserve Bank of India or the government and, with global uncertainty dragging on, we see nothing on the horizon to lift the economy from its funk.”

While releasing its outlook on India’s investment scenario, S&P Credit Analyst Takahira Ogawa had said in April: “The outlook revision reflects our view of at least one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political set-up.”

The government, on its part, has been trying to improve its record on the reform front since then, but it is yet to make a headway.

Keen to prevent a downgrade of India’s sovereign rating by S&P, which could trigger an exodus of foreign investors, Singh had told the Congress party last month that there was no option but to raise diesel prices by at least Rs 5 a litre after the Presidential election.

Prime Minister’s Economic Advisory Council Chairman C Rangarajan had also said yesterday that the overall growth rate for the current year could be slightly better than last year’s 6.5 per cent. He said industrial production should pick up in the second half of the year and agriculture activities’ contribution to GDP should also be higher.

SBI raises $1.25 b from overseas bond sale

New Delhi, July 26:  State Bank of India raised $1.25 billion from an overseas-dollar-denominated bond sale on Thursday. This is the largest single-tranche offering by a public sector bank from India.

The bank’s London branch issued 4.125 per cent five-year-notes due in July 2017 at 375 basis points, spread over five-year US Treasuries. The notes offer the lowest ever coupon achieved for an Indian issuer in the US dollar bond market in the five-year tenure, said a banker close to the development. The notes, a debt instrument, are rated Baa2 by Moody’s and BBB- by Standard & Poor’s.

This is also the first public sector bank US dollar bond issuance out of India since May 2011. The last dollar-denominated bond offering by an Indian company was in February when Axis Bank raised $500 million (in the form of five-year medium-term notes) at 440 basis points spread over five-year Treasuries. SBI had hired six global giants — Citigroup, Barclays, Bank of...

SBI's $1 billion international bond issue opens

Mumbai, July 25: State Bank of India on Wednesday launched an international five-year bond sale programme to raise at least USD one billion. When contacted, SBI Managing Director and Group Executive for International Banking Hemant Contractor said that the bank on Wednesday launched its benchmark bond sale through book-building route.
"The issue is open and the details like pricing and the quantum of funds being mobilised will be known only by late night," Contractor said. A benchmark bond issue typically aims to raise more than USD 500 million. According to sources, the bond issue is of over USD 1 billion size with a five-year tenure.
The issue's investment bankers include Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, JP Morgan and UBS. SBI launched a marketing campaign for its benchmark bond issue on July 16 in Hong Kong, Singapore, London, New York, Los Angeles, Boston, Frankfurt and Zurich.
The bank has a board mandate to raise USD 10 billion from overseas markets over the next few years, and it has a headroom to raise nearly USD 7 billion more since it has raised USD 4 billion. The senior notes offering, which has been rated as 'BBB-' by Standard & Poor's, is a dollar-denominated issue. Giving the 'BBB-' rating on the SBI bond sale, S&P had earlier said this reflects the long-term counterparty credit rating on the bank. "The proposed notes will constitute direct, unconditional, unsecured, and un-subordinated obligations of SBI," S&P said.
SBI's move to raise overseas funds comes in the wake of the recent RBI steps to stem the falling rupee value and measures to encourage foreign debt inflows. Earlier, ICICI Bank and India Overseas Bank had initiated their respective dollar bond plans and had also hired investment bankers, but the offerings were delayed amid tough market conditions.
While Indian Overseas Bank was aiming to raise about USD 500 million, ICICI Bank was eyeing USD one billion through a bond sale. A slew of sovereign downgrades in the past few months have made it difficult for domestic companies to raise overseas debt. So far this year, a sum of USD 4 billion has been raised by two corporates -- USD 3.5 billion by Reliance Industries in two instalments in February and May, and USD 500 million by Axis Bank.
The fourth issue which is underway now, is again from RIL, to raise another USD 1.5 billion, for which market making meetings are beginning tomorrow in Singapore. However, domestic companies had raised over USD 8 billion through dollar bonds in 2011.