Canara Bank Aims To Raise Rs 5,000 Cr With 10-Year Bonds: Report
Canara Bank, a state-owned entity, is set to launch infrastructure bonds worth Rs 5,000 crore on 24 November, with a maturity period of 10 years concluding on 29 November 2033. The initial issuance size is Rs 1,000 crore, with an option to retain oversubscriptions up to Rs 4,000 crore, bringing the total aggregate issuance to Rs 5,000 crore.
The pay-in date for the bonds is scheduled for 29 November, representing the day when the exchange of bonds and funds occurs between issuers and investors. Notably, CARE Ratings and India Ratings have both assigned 'AAA' ratings to these bonds, indicating a high level of creditworthiness.
In a parallel development, REC, earlier on the same day, successfully raised Rs 2,899.69 crore through 10-year bonds carrying a 7.71 per cent coupon. Additionally, there are plans for REC to issue two bonds totaling Rs 6,000 crore on 23 November, aiming to collect Rs 3,000 crore from each of the 10-year and two-and-a-half-year bonds, according to a media report.
Furthermore, on 21 November, the Indian Railway Finance Corporation achieved success in securing Rs 2,404 crore through three-year bonds with a 7.68 per cent interest rate. In a separate issuance, the Small Industries Development Bank of India raised Rs 4,887 crore through five-year bonds carrying a 7.83 per cent coupon.
The strategic move by Canara Bank and other financial institutions to tap into the bond market aligns with the advantageous conditions that bonds offer. Bonds serve as a means for companies to secure significant funds at favorable interest rates, facilitating investment in expansion and various projects.
Moreover, bonds afford companies increased operational flexibility when compared to traditional bank loans, which often come with more restrictive conditions. The recent activities in the bond market highlight the continued appeal of this financial instrument for raising capital and supporting diverse financial initiatives.
