Rs 450 Crore Tier-Ii Floats In A Month

With less than three months left in the current fiscal year, state-run banks are on the bond-street to raise capital through tier-II issues. More than Rs 450 crore worth of issues are likely to hit the market in the next one month. The banks that are in the process of raising such funds are Bank of India, Union Bank of India, State Bank of Hyderabad and State Bank of Mysore.

Said a merchant banking source: "There were not many issues of tier-II bonds in the whole financial year. With not much time left and interest rates at very low levels, banks are expected to come to the market now."

Bank of India is set to hit the market with a Rs 160 crore issue in the next week. The issue has a notified amount of Rs 100 crore, with a greenshoe option of another Rs 60 crore. The paper has a maturity of 63 months and an annually payable coupon of 9.20 per cent. It is rated AA+ (double A plus) by Credit Rating Information Services of India Ltd (Crisil). Standard Chartered Bank, Kotak Mahindra Capital Company and Centrum Finance are the lead arrangers of the issue.

The notified amount for the State Bank of Mysore issue, which was launched today, is Rs 60 crore and is rated LAA- (L double A minus) by Investment Information and Credit Rating Agency (Icra). The coupon rate for the issue is pegged at 9.40 per cent and it has a tenure of 63 months. SBI Capital Markets Ltd is the sole arranger for the issue.

State Bank of Hyderabad's issue will have a core size of Rs 150 crore. It will be managed by SBI Capital Markets. The coupon rate is not fixed yet.

According to merchant banking sources, Union Bank of India is also likely to launch a Rs 100 crore tier-II issue shortly. The details of the issue were not available.