Bank of Maharashtra raises just Rs 811 crore in infrastructure bond sale

Lender was looking to mop up Rs 3,000 crore, but bids totalled only Rs 1,390 crore

Bank of Maharashtra raised only Rs 811 crore through a 10-year infrastructure bond issue at a coupon rate of 7.8 per cent on Thursday. The bank had aimed to raise up to Rs 3,000 crore, but bids totalled only Rs 1,390 crore, with most proposals seeking higher rates. The issue had a base size of Rs 500 crore and a greenshoe option of Rs 2,500 crore.

Investors sought returns between 7.85 per cent and 7.9 per cent, but the bank opted to stick with 7.8 per cent, which limited the amount raised.

Market sources noted that bids totalling roughly Rs 500 crore were placed at 7.85 per cent.

A dealer at a state-owned bank commented, “Most bids exceeded 7.8 per cent, and the bank was not prepared to meet those rates.”

The dealer added that only Rs 500 crore of the total bids were at 7.85 per cent.

In contrast, Canara Bank secured Rs 10,000 crore at a 7.4 per cent coupon rate on July 16.

State Bank of India raised Rs 10,000 crore on July 10 at a 7.36 per cent rate for a 15-year tenor, and another Rs 10,000 crore at the same rate on June 26.

Bank of India also sold Rs 5,000 crore in 10-year bonds at a 7.54 per cent rate on July 19.

Earlier, Bank of Maharashtra raised Rs 1,000 crore through Basel III Tier II bonds with a 7.89 per cent rate. On July 18, the bank’s board approved raising up to Rs 10,000 crore through long-term infrastructure bonds this financial year, in multiple tranches via public issues or private placements.