Gsfcs Bond Oversubscribed By Rs 50 Crore

The Rs 75 crore priority sector bond issue of Gujarat State Financial Corporation Ltd (GSFC) has been oversubscribed, despite the hardening of interest rates.

The issue garnered Rs 125 crore under a government guaranteed option at 11.75 per cent. There were no takers under the second option, which offered an interest rate between 11.75-12 per cent, but without a guarantee from the Gujarat government.

The 8 year bond issue, which closed on January 23, 1998, was arranged by ANZ Investment Bank.

According to Prakash Subramanian, assistant director, global capital markets, ANZ Investment Bank, the issue, which targeted foreign and private banks to meet their priority sector lending targets, got responses even before it opened.

 

Despite the firming up of interest rates over the last fortnight banks stood by their commitments, he said.

The issue was oversubscribed due to the priority sector target carrot. Most foreign and private sector banks do not have to reach to advance priority sector loans.

GSFC had a capital adequacy of 14.39 per cent as on March 31, 1997. Its net profit for the year stood at Rs 33.39 crore, on a total income of Rs 189.71 crore.

The companys half-yearly profit as on September 30, 1997, was Rs 20.03 crore, on a total income of Rs 100.87 crore.

GSFCs compounded annual growth rate in total income and net profit over the last five years was 15 per cent and 18 per cent, respectively.