Bank of Baroda raises Rs 5,000 crore from infra bond issue

State-owned Bank of Baroda has announced that it has raised Rs 5,000 crore through a 10-year infrastructure bond issuance subscribed by domestic investors. This is the second issuance from the lender in a fortnight after the Rs 5,000 crore sale on August 26 and comes amid a raft of such issuances.

The bank managed to reduce the pricing of the latest offering to 7.26 percent, which is 0.04 percent lower than the previous one. Officials mentioned that this is the most competitive pricing for issuance in recent times.

Both 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.

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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, the official said.

The bank, however, has a headroom to raise 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.

 

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The funds raised from deposits are subject to mandatory statutory liquidity ratio and cash reserve ratio requirements, resulting in the bonds being 0.65 percent cheaper to issue.

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