NSB to raise US $ 250mn via another int’l bond issue

3 September 2014 04:57 am

tate-run banking giant, National Savings Bank (NSB) is drawing up plans to sell a US $ 250 million international bond in the near future to fund its operations.
The Singapore offices of global rating agencies Fitch and Standard & Poor have given the proposed senior unsecured notes similar tier expected ratings of BB- and B+, respectively, rated at the same long-term issuer credit ratings of NSB at BB-/Stable and B+/Stable, respectively.

Both agencies announced that the ratings may change based on the final issuance of documentation by the bank.

According to Bloomberg, the bonds would carry a maturity period of five years, while an initial price guidance of 5.5 percent has been set.

The bonds would carry a maturity period of five years, while an initial price guidance of 5.5 percent has been set

UK’s Barclays PLC and HSBC Holdings PLC and US-based Citigroup Inc. would be the sale managers of the issue.

Last year, NSB issued a similarly rated US $ 750 million bond— which is the largest by a Lankan financial institution so far— with a maturity of five years at an interest rate of 8.875 percent,  which was oversubscribed by over 6.8 times.

These funds were used for lending purposes, while initial deliberations were for a US $ 1 billion issuance, which the upcoming bond would add up to.
According to Fitch, the government support for NSB stems from its policy mandate of mobilising retail savings and investing them in government securities.
The ratings also reflect preferential state support to the bank in the form of the explicit guarantee for its deposits contained in the NSB Act.

Fitch is of the view that the authorities would support depositors and senior unsecured creditors of NSB to maintain confidence and systemic stability in case of need, even though the NSB Act only contains an explicit deposit guarantee.