Bank of Baroda Raises Rs 5,000 Crore From Another Infrastructure Bond Issue

Bank of Baroda has raised Rs 5,000 crore through 10-year infrastructure bond issuance subscribed by domestic investors. The coupon for senior, rated, listed, unsecured, redeemable, long-term, fully paid-up, non-convertible bonds stands at 7.26%, according to the exchange filing on Monday.

This is the second issuance from the lender in a fortnight after the Rs 5,000 crore sale on Aug. 26 and comes amid a raft of such issuances. The bank successfully reduced the pricing of its latest offering to 7.26%, which is four basis points lower than the previous issuance. This represents the tightest pricing for an issuance in recent times.

Banks have become more aggressive at tapping into such avenues, given the slower deposit growth in the system.

Both the issuances were oversubscribed nearly three times, and it was investor feedback on missing out at the last issuance that prompted the bank to come back with another offering sooner.

With the latest issuance, the bank has exhausted the board's approved limit to raise Rs 10,000 crore from infra bond issuances and there are no immediate plans to raise more, an official said.

The bank, however, has a headroom to raise up to Rs 7,500 crore from either additional tier-I or tier-II bonds, and will be tapping the markets for the same.

In the latest issue, the bank got 105 bids totalling Rs 14,215 crore, of which Rs 5,000 crore were accepted, as per a statement.

Allotment of the bonds took place on Monday, and the investors in the latest issuance include mutual fund, insurers and pension funds.

Asked about the pricing, the official explained that money mobilized from deposits attracts mandatory statutory liquidity ratio and cash reserve ratio requirements, and hence, the funds come up to 0.65 per cent cheaper in a bond issuance.

(With Inputs From PTI)