Financial Institutions Secure Rs 13,500 Cr Through Bond Issuances
Wednesday saw robust fundraising activity in the bond market as Bank of Baroda, National Bank for Agriculture and Rural Development (NABARD) and the Indian Renewable Energy Development Agency (IREDA) collectively raised Rs 13,500 crore through bond issuances. While NABARD and Bank of Baroda's issuances were fully subscribed, IREDA managed to secure Rs 1,000 crore against its total issue size of Rs 2,500 crore.
IREDA initiated a bond issue with a base size of Rs 500 crore and a greenshoe option of Rs 1,500 crore. The greenshoe allows companies to issue additional bonds beyond the base size to raise more funds.
Vikas Goel, MD, and CEO of PNB Gilts, noted, "Given the tightness in the money market induced by RBI's monetary policy, entities are seeking alternative avenues for funding growth, shifting from loans to the bond market." He highlighted that demand for long-tenor bonds predominantly originates from insurance companies.
NABARD raised Rs 10,000 crore via 10-year bonds at a coupon rate of 7.65 per cent, while Bank of Baroda raised Rs 2,500 crore through tier-2 bonds at a coupon rate of 7.75 per cent. The bond market will witness further activity this week, with the National Bank for Financing Infrastructure and Development (NaBFID) planning to raise Rs 10,000 crore through 15-year infrastructure bonds on Thursday. Additionally, Punjab National Bank aims to raise Rs 3,000 crore by the end of the month.
Small Industries Development Bank of India (SIDBI) plans to raise up to Rs 5,000 crore, while the Kerala Infrastructure Investment Fund Board (KIIFB) is set to raise Rs 1,499.96 crore this month.
Market dealers anticipate continued high demand from investors for long-tenor bonds, driven by the current peak of the interest rate cycle and investors' preference to secure higher rates.
Earlier in the week, HDFC Bank successfully raised Rs 7,425 crore via non-convertible bonds for infrastructure and affordable housing projects. The bank's statement highlighted the issuance of 7.71 per cent unsecured, redeemable, long-term, fully paid-up, non-convertible bonds on Wednesday through private placement.
On Monday, Shriram Finance and Tata Projects also conducted bond issuances, with Shriram Finance selling two bonds worth Rs 2,000 crore and Tata Projects issuing two bonds totaling Rs 1,150 crore.
