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Informist, Thursday, Jan. 9, 2025

--Sources: Bk of Baroda likely to raise up to INR 50 bln via 10-yr infra bond

--Sources: Bank of Baroda may seek bids for 10-year infra bond next week

By Vaishali Tyagi, Ashna Mariam George, and Sachi Pandey

MUMBAI – Bank of Baroda is set to tap the market for funds with an infrastructure bond next week, multiple sources told Informist, with the country's second-largest public-sector bank planning to raise up to INR 50 billion through securities maturing in 10 years.

"They (Bank of Baroda) were planning to announce it tomorrow (Friday) itself, but some finalisation with arrangers is yet to be done. They are in the final stage of negotiations and may announce it on Monday, with bidding on Tuesday or Wednesday," a person aware of the matter told Informist on the condition of anonymity.

The proposed bond is likely to be allotted on Jan. 17, with a base size of INR 20 billion and a greenshoe option of INR 30 billion. Last week, CRISIL Ratings assigned a 'AAA' rating with stable outlook to Bank of Baroda's infrastructure bonds worth up to INR 100 billion. So far in the current financial year, the bank has raised a total of INR 100 billion through these instruments in two tranches, with the last instance being in September, when it mopped up INR 50 billion at 7.26%.

Market participants expect the coupon for the upcoming bond issue to be similar. "The coupon should be in the range of 7.25-7.30%. But since levels overall are a bit on the higher side, investors such as LIC (Life Insurance Corp.) and EPFO (Employees Provident Fund Organisation) might demand a bit higher coupon," another source said.

So far in the financial year 2024-25 (Apr-Mar), Indian banks have raised nearly INR 800 billion through infrastructure bonds, with State Bank of India alone accounting for INR 300 billion and Canara Bank for another INR 100 billion. Infrastructure bonds are particularly appealing to banks as the proceeds from them are exempt from regulatory reserve requirements.

On Thursday, shares of Bank of Baroda ended 0.8% lower at INR 231.04 on the National Stock Exchange.  End

Edited by Rajeev Pai

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