S&P assigns BBB- to Union Bank of India's MTN debt plan

Moneycontrol Bureau

Global rating agency Standard & Poor's on Monday assigned its 'BBB-' rating to the proposed issue of senior unsecured notes by Union Bank of India (UBI). The bank will issue the notes under its US$2 billion (or around Rs 10,800 crore) medium-term notes programme.

"The rating on the notes reflects the long-term counterparty credit rating on the bank. The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of UBI. They shall at all times rank at par among themselves and with all other unsecured obligations of the bank," S&P said in a release.

MTNs are a kind of bonds issued by banks in abroad with a maturity period in the range of five and ten years. This helps banks to meet their financial requirements in their overseas branches.

India's largest lender – the State Bank of India has recently mopped up USD one billion (or around Rs 5,440 crore) through international bond sales offering an interest rate of 3.25%. Those bonds are of five years tenure and listed in the Singapore Stock Exchange.

Besides, the lender had earlier planned an MTM fund raising plan for USD 10 billion of which, it has already utilized USD 3 billion.