NaBFID raises Rs 5,000 crore via 15-year bonds at 7.25% cut-off rate

The cut-off for 'AAA'-rated issuers' long-term issuance has moved up in the last few months, market experts said

State-owned National Bank for Financing Infrastructure and Development (NaBFID) on Tuesday raised Rs 5,000 crore through 15-year bonds at a cut-off rate of 7.25 per cent, sources said.

 

Additionally, state-owned Power Finance Corporation (PFC) raised Rs 3,950 crore through bonds maturing in approximately 10 years and 20 years, with cut-off rates of 7.24 per cent and 7.25 per cent, respectively.

 

According to market participants, NaBFID's cut-off rate was considered realistic, given the large state development loan (SDL) issue this week and the increasing selectivity among some of the large long-term investors.

 

The cut-off for ‘AAA’-rated long-term issuance has moved up in the last few months, said market experts. State–owned REC had raised Rs 1,620 crore through bonds maturing in 10 years at a very attractive cut of 7.10 per cent. During this time, the 10–year government securities yield has come down from 6.74 per cent at the end of November to 6.67 per cent as of February 4.

 

“Long-term investor demand from insurers, pension funds, and EPFO is typically strong during December–January, leading to tighter cut-offs for 10- and 15-year ‘AAA’-rated bonds. However, as demand tapered off in February and investors shifted towards G-Secs and SDLs, yields on these long-term ‘AAA’ bonds edged higher due to softer demand and widening credit spreads,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.