 "Bonds")
State-owned Bank of India (BoI) raised Rs 5,000 crore through a 10-year infrastructure bond issuance at a coupon rate of 7.41 per cent on Wednesday. In a separate move, Bank of Baroda (BoB) secured Rs 3,500 crore by issuing Basel III-compliant Tier-2 bonds at the same coupon rate, according to sources familiar with the matter.
BoB’s Tier-2 bond issuance had a base size of Rs 1,000 crore and a green shoe option of Rs 2,500 crore. The issue received a strong investor response, with bids totalling Rs 9,500 crore — nearly three times the issue size.
The bonds, which are rated AAA/stable by CRISIL and India Ratings, have a 15-year tenure with a 10-year call option. The issuance garnered 120 investor bids, the sources added.
BoI’s issuance saw significant demand, too, with bids amounting to around Rs 13,700 crore — roughly 2.7 times the targeted amount. The infrastructure bonds had a base size of Rs 2,000 crore and a green shoe option of Rs 3,000 crore. In July, BoI had raised Rs 5,000 crore through a similar 10-year infrastructure bond offering at a slightly higher coupon rate of 7.54 per cent.
“These issuances highlight the robust investment appetite among institutional investors for long-tenor bonds from government-owned banks, despite the tight liquidity condition in the banking system,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP. “Despite negative systemic liquidity in recent days, qualified institutional buyers (QIBs) have displayed significant capacity to deploy funds in high-quality credits, reinforcing the resilience and confidence in this segment of the debt market.”
Srinivasan further noted: “Given the sustained demand and the attractive pricing achieved, we anticipate this trend of oversubscription for high-rated bond issuances to continue in the near term.”
More From This Section
 "The Reserve Bank of India (RBI) is expected to drop broad hints for the adoption of the expected credit loss (ECL) framework at Monday's meeting with the boards of private banks in Mumbai.")
 "RBI DG Swaminathan Janakiraman")
 "chart")
 "M Rajeshwar Rao, deputy governor at the Reserve Bank of India")
 "Rs, Rupee, Indian Currency")
Commercial banks’ infrastructure bond issuances in FY25 are projected to exceed Rs 1 trillion, almost double the amount raised in FY24. Banks have raised around Rs 80,000 crore via such bonds this financial year, so far, compared to Rs 51,081 crore in FY24. These bonds are particularly advantageous for banks as they are exempt from regulatory reserve requirements such as the statutory liquidity ratio (SLR) and cash reserve ratio (CRR).
In a related development, State Bank of India (SBI) announced it has raised Rs 50,000 crore from the domestic debt capital market in FY25, so far. Of this, Rs 30,000 crore was raised through infrastructure bonds, Rs 15,000 crore through Tier-2 bonds, and Rs 5,000 crore through Tier-1 bonds.
“All these issues have attracted overwhelming response from investors and were oversubscribed by more than two times against the respective base issue size. Investors were across provident funds, pension funds, insurance companies, mutual funds, banks, etc,” said SBI in a statement.
C S Setty, chairman of SBI, emphasised that the broad participation and diversity of bids reflect the strong trust investors have in the country’s largest bank.
 "Bank of India")
 "Debt funds")
 "Bank of India")
 "bank of india boi")
