Idbi Flexibond Mop-Up Falls Short Of Target

The Industrial Development Bank of India (IDBI) mopped up Rs 1,200 crore through its Flexibond-4 issue, against an overall target of Rs 1,500 crore. The issue, which opened on September 21, closed for subscription on Saturday.

IDBI officials attributed the relatively weak response to worsened market sentiment among retail investors following the redemption pressures faced by the Unit Trust of India (UTI), one of the country's largest financial institutions, on its flagship US-64 scheme.

Besides, the market has been flooded with bond issues as ICICI Ltd hit the retail debt market twice this year to raise Rs 600 crore, they added.

The issue was sized at Rs 750 crore, and IDBI had a greenshoe option to hold an additional Rs 750 crore. It offered four instruments -- a regular income bond, growing interest bond, deep discount bond, and education bond.

Analysts said the weakened sentiment over issues floated by even triple A rated organisations was inevitable following the erosion in the asset value of the US-64, traditionally regarded as a safe-haven equity investment option for the retail investor.

"With the economic downturn, the deterioration in the capital adequacy and asset quality of these institutions raises doubts," an analyst said.

IDBI, in April, received umbrella clearance from the Securities and Exchange Board of India (Sebi) to raise Rs 5,000 crore in fiscal year 1998-99. This was the first tranche under this general permit.

The umbrella clearance permitted IDBI to issue 10 instruments which included infrastructure bonds, growing interest bonds, deep discount bonds, regular income bonds, floating rate bonds, education bonds, retirement bonds, gift bonds, inflation bonds and multi-option bonds.