NaBFID Raises Nearly Rs 3,911 Crore By Selling 20-Year Bond At 7.36%
The 20-year bond received 108 bids worth Rs 10,310.8 crore in the range of 7.24–7.58%, according to a bid book accessed by NDTV Profit.
The National Bank for Financing Infrastructure and Development raised nearly Rs 3,911 crore on Monday by selling a 20-year bond at a coupon of 7.36%, according to debt merchant bankers.
The issue, with a base size of Rs 1,000 crore, carried a greenshoe option that allows the company to accept additional Rs 4,000 crore worth of bids in the event of oversubscription.
The 20-year bond received 108 bids worth Rs 10,310.8 crore in the range of 7.24–7.58%, according to a bid book accessed by NDTV Profit.
According to merchant bankers, this is a tight pricing for NaBFID as the spread between corporate bonds and their corresponding government securities have narrowed, leaving little carry for corporate bonds.
NaBFID's 20-year bond issue at 7.36% was 25 basis points higher than the corresponding government bond.
The rate is not fair and the spread is way too low and insufficient. However, there is huge demand coming in from pension funds, provident funds and insurance companies because of their regulatory allocation rule and since it’s a new issuer, a senior debt merchant banker told NDTV Profit on the condition of anonymity.
The infrastructure financing bank's 20-year bond issue, rated 'AAA' by Crisil Ratings, garnered demand from long-term investors such as Employees' Provident Fund Organisation, pension funds, and a large insurance company, three merchant bankers told NDTV Profit on the condition of anonymity.
"This was a very specific issue meant for long-term money. We took only Rs 3,900 crore because we were comfortable at a 25 bps spread over corresponding government securities. We found this rate reasonable," Managing Director Rajkiran Rai G told NDTV Profit.
Last month, NaBFID had raised Rs 5,000 crore through the issuance of a 10-year bond at a coupon of 7.43%. The issue was fully subscribed.
In the financial year ended March, the company raised a total of Rs 19,516 crore through two bond issuances, one maturing in 10 years and the other in 15 years, at a coupon of 7.43% and 7.65%, respectively.
NaBFID was incorporated on April 19, 2021, as a development financial institution regulated by the Reserve Bank of India. It is regulated and supervised as an All India Financial Institution and has been primarily set up to support long-term infrastructure financing in India, including the development of bonds and derivatives markets necessary for infrastructure financing.
