Bank Of India Looks To Raise Up To Rs 5,000 Crore Via Infra Bonds Next Week

Bank of India is charting out plans to raise up to Rs 5,000 crore through the issue of 10-year infrastructure bonds by next week, three people in the know told NDTV Profit.

This is the state-owned bank's second batch of 10-year infrastructure bonds in the current financial year.

The issue is likely to have a base size of Rs 2,000 crore and a greenshoe option of Rs 3,000 crore, with bidding likely to take place on Nov. 27.

The bonds, rated AA+ by CARE Ratings, are expected to be issued at around 7.40-7.45% rate, two people in the know said. However, the bank expects to issue these bonds in the range of 7.34-7.38%.

In July, the bank had raised Rs 5,000 crore through 10-year infra bonds at a coupon of 7.54%, which was fully subscribed.

Bank of India has a loan pipeline of over Rs 70,000 crore. Of this, infrastructure pipeline is of nearly Rs 15,000 crore, Managing Director and Chief Executive Officer Rajneesh Karnatak said in the second quarter earnings call.

The bank has infrastructure loan pipeline for roads and disbursals for roads, ports and solar power plants and wind energy are yet to take place. The bank has also sanctioned some data warehouse projects as well, Karnatak said.

Last week, State Bank of India mopped up Rs 10,000 crore through 15-year infrastructure bonds at a coupon of 7.23%, which was fully subscribed.

Banks and financial institutions raise funds through infrastructure bonds to finance their long-term infrastructure projects.

These bonds have a minimum maturity of seven years and are eligible for some regulatory exemptions, such as mandatory requirements of statutory liquidity ratio and cash reserve ratio. Affordable housing loans also qualify for lending against infrastructure bonds.