P & Sb To Place Bonds Of 13% Interest Rate

Punjab and Sind Bank (P&SB) has decided to offer an interest rate of 13 per cent for its forthcoming private placement of the bond issue while Dena Bank is contemplating to select the book building route to raise funds for its bond issue. It is might offer an indicative rate of 12.75-13.0 per cent for its debt issue.

P&SB has decided to raise a principal amount of Rs 50 crore with a green shoe option of Rs 50 crore, while Dena Bank is thinking of rating Rs 200 crore.

Both the banks are entering the debt market to raise Tier II capital to beef up their capital adequacy ratio.

At present, Punjab and Sind Bank and Dena Bank have capital adequacy ratios of 9.94 per cent and 9.5 per cent respectively.

After the bond issue, the capital adequacy ratios will go up to 12 per cent and 11.5 per cent respectively.

P&SB has already received clearance from finance ministry and Reserve Bank of India while Dena Bank is still awaiting RBI clearance.

P&SB will offer bonds maturing in five years and three months and will have bullet payment when the paper matures.

The instrument rated A- by Icra will open for subscription on January 5 and close on January 15. It offers 13 per cent coupon on a semi-annual basis and the annualised yield works out to 13.42 per cent.

IDBI Capital market is the lead arranger, while SBI Capital Market, UTI Securities and PNB Capital Market are the arrangers to the issue.

P&SB has posted a net profit of Rs 29 crore in the first half of the current financial year. Its operating profit stands at Rs 46 crore. The banks deposits stand at 7177 crore, advances at Rs 2986 crore and investment at Rs 3396 crore. The bank has a capital of Rs 706 crore and reserves and surplus stands at Rs 66 crore as of September 1997.