Idbi Mops Up Rs 1,400 Crore Via Flexibonds

The Rs 1,500 crore Flexibond 2 issue of Industrial Development Bank of India (IDBI) which closed yesterday mopped up about Rs 1,400 crore.

The bond issue saw phenomenal response from wholesale investors like provident funds, regional rural banks, charitable trusts and banks.

IDBI sources said the response was not very good on the retail side. The Flexibond 1 issue launched in March last year garnered 19 lakh applications the bulk of which was from retail investors.

This time, however, the retail investor did not participate because of the large number of debt issues hit the market during the interval between Flexibond issue 1 and 2, the sources said.

Another difference between the last offering and this one was the fact that Super Deposit Scheme and the Monthly Income Scheme drew the maximum number of applications. The last time deep discount bonds had been the most talked about ones, merchant banking sources said.

IDBI sources said most of the retail response was from the west. Response from the south was not good but from the west and the north was good, sources said. Merchant banking sources said with so many bond issues designed like IDBI Flexibond 1, the retail investor is going through a debt fatigue.

The fact that the issue has been able to attract the wholesale investor at a time when interest rates are coming down is a good sign. With private placement going on at much higher yields, the wholesale investor still came to us although we were offering a much lower coupon rate and upfront discount was just 1.75 per cent compared to 4 per cent others are offering. This shows that our fundamentals are very strong and our brand name counts, IDBI sources said.

Merchant banking sources said timing of the issue was also good as more than Rs 10,000 crore special deposit interest to the provident funds had to be parked. A number of quasi-wholesale investors bought the paper as they found it to be a safe investment.