The bond market witnessed strong fundraising activity on Wednesday, with Bank of Baroda, National Bank for Agriculture and Rural Development (NABARD) and the Indian Renewable Energy Development Agency (IREDA) raising Rs 13,500 crore through bond issuances. The issuances of NABARD and Bank of Baroda were fully subscribed, while IREDA managed to raise Rs 1,000 crore against the total issue size of Rs2,500 crore.
IREDA’s bond issue had the base size of Rs500 crore and Rs 1,500 crore in greenshoe option. A greenshoe is the over-allotment option that allows companies to issue more bonds or raise more funds than the base issue size.
NABARD raised `10,000 crore via 10-year bonds, at a coupon rate of 7.65%, while Bank of Baroda raised `2,500 crore through tier-2 bonds at a coupon rate of 7.75%. The action will continue in the bond market this week. National Bank for Financing Infrastructure and Development (NaBFID) will raise `10,000 crore through 15-year infrastructure bonds on Thursday. Punjab National Bank is also planning to raise `3,000 crore at the end of this month.
Small Industries Development Bank of India (SIDBI) is planning to raise up to `5,000 crore, while Kerala Infrastructure Investment Fund Board (KIIFB) will raise `1,499.96 crore this month.
“The demand from investors is expected to remain high for long-tenor bonds. We are at the peak of interest rate cycle and and investors want to lock in at higher rates,” said a dealer at a private bank.
HDFC Bank on Monday had raised `7,425 crore via non-convertible bonds for funding infrastructure and affordable housing projects. The bank issued and allotted on Wednesday on a private placement basis 7.71 % unsecured, redeemable, long-term, fully paid up, non-convertible bonds in the nature of debentures, it said in a statement on Wednesday. Shriram Finance sold two bonds amounting to `2000 crore and Tata Projects issued two bonds totalling `1,150 crore on Monday.