BoB raises Rs 5,000 cr via infra bonds; completes Rs 10,000 cr target

Public sector lender Bank of Baroda has raised Rs 5,000 crore through infrastructure bonds. The coupon was fixed at 7.57 per cent for the 10-year paper.

Bond market sources said the initial guidance for the coupon was 7.63-7.64 per cent. However, the lender could tighten the rate at 7.57 per cent with the response (bids) exceeding three times the indicative amount – the issue size of Rs 1,000 crore plus a green shoe of Rs 4,000 crore.

Institutional investors, including pension and insurance companies, participated in the infra bond issue. CRISIL Ratings has assigned a ‘CRISIL AAA/Stable’ rating to these bonds.

With this offering, BoB has completed a targeted Rs 10,000 crore fundraise via infrastructure bonds. In November, it had raised Rs 5,000 crore via infrastructure bonds with a coupon of 7.68 per cent, a market source said.

The cash reserve ratio (CRR) and statutory liquidity ratio (SLR) do not apply to infrastructure bonds, leaving more money in the hands of banks for lending. This puts more resources in the hands of lenders for deployment in infrastructure projects like power, roads, airports, and affordable housing.