On August 24 when Asian markets were being blighted by Russia's debt default, the Indian government was busy closing a $4.23 billion deal that made investment bankers salivate. Over 74,000 expatriate Indians in over 30 countries bought up five-year Resurgent India Bonds (RIBs) denominated in dollars, sterling and Deutschmarks in what was the single largest debt offer out of India. The dollar bonds carried a coupon of 7.75%, a spread of 225 basis points over US treasuries. The State Bank of India, India's largest commercial bank that issued the bonds on behalf of the government, clinched the sale in just 20 days.
For the Indian government the issue's success made a political statement. Coming just weeks after the US had imposed economic sanctions on India (as punishment for nuclear tests it carried out in May) and a two-notch downgrade by Moody's to a speculative Ba2 in June, the timing was sweet. Neighbouring Pakistan was pushed to the brink of default by sanctions, and the Indian government was keen to prove that India would not buckle. The ecstatic reaction of many expatriates to India's nuclear machismo may have helped the government make that point.
More sober bankers talk of the detailed planning and astute marketing that sold the issue.