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Informist, Thursday, Sep 12, 2024

 

--Sources: Bk of India may raise up to 25 bln rupees via tier-II bonds 

--Sources: Bk of India's 10-yr, tier-II bond issue likely in 2 weeks

 

By Sachi Pandey

 

MUMBAI – Bank of India is likely to raise up to 25 bln rupees through what would be its first tier-II bond issue of 2024-25 (Apr-Mar), sources aware of the development told Informist. The bank is expected to invite bids for bonds, maturing in 10 years, in the next couple of weeks via private placement, they added.

 

"They are looking for tier-II bonds and the total size would be around 2500 crores (25 bln rupees). They have not decided on greenshoe yet, but 2,500 includes the greenshoe size," a merchant banker involved in the transaction told Infomist. The source further said that bids could be invited on Sep 23, though the date is yet to be finalised.

 

According to market participants, Bank of India's bond issue could be at a coupon of 7.55-7.60%. Last year, the state-owned bank raised 20 bln rupees--also through tier-II bonds maturing in 10 years--at a coupon of 7.88%.

 

So far this financial year, State Bank of India and Bank of Maharashtra have together raised 85 bln rupees through this debt instrument.

 

On Wednesday, India Ratings and Research assigned an "AA+" rating to Bank of India's tier-II bonds for an amount aggregating to 25 bln rupees. It also assigned "AA+" rating to infrastructure bonds worth up to 50 bln rupees, the bank said in an exchange filing.

 

However, according to sources, Bank of India's infrastructure bond issue is expected to hit the market only next month. "They have already raised 5,000 crores (50 bln rupees via infrastructure bonds). So for the remaining (amount), they will come...when the rates will go down more," the above source said.

 

The bank's board approved raising 100 bln rupees through long-term infrastructure bonds in 2024-25. It raised 50 bln rupees through 10-year bonds in July at a coupon of 7.54%. Today, shares of Bank of India closed 0.3% lower at 110.86 rupees on the National Stock Exchange.  End

 

Edited by Aditya Sakorkar

 

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