MUMBAI, Jan 6 (ET Bureau): State-owned IDBI Bank is set to raise Rs 26.0 billion by selling infrastructure bonds with a 10-year maturity. The bank is likely to finalise the bond sales on Tuesday as it is looking to obtain a better pricing, said a top official from the bank.
"We are yet to conclude on the final issuance deal," MS Raghavan, chairman and managing director, IDBI Bank, told ET, confirming the move. The bank may do away with the issuance if it doesn't get the right pricing. "We have already received bids," the CMD added.
The interest rate is apparently set at 8.74 per cent, but the bank chairman has not yet approved it. SBI Capital Market is the sole arranger of the issuance, three people familiar with the matter said. The Employees' Provident Fund Organisation (EPFO) is likely to be the largest investor in the issuance.
Ratings agency Crisil has assigned an AA+/Stable rating to the bond issuance.
The central provident fund body receives interest payment in a wide range of about Rs 50-80 billion on Special Deposit Scheme, launched by the government in July 1975, on the first day of every calendar year.
Earlier, in September last year, IDBI Bank mopped up Rs 10 billion by issuing infrastructure bonds. The coupon or interest rate was at 9.5 per cent with similar maturity. This time, the bank would be better-off with cheaper rates as the benchmark 10-year government bond yield is now hovering 64-68 basis points lower compared to September.
About a month ago, country's third-largest private sector lender, Axis Bank, collected Rs 57.05 billion by selling infrastructure bonds offering 8.85 per cent rate. Those were rated as triple-A by CRISIL & ICRA. India's largest private sector lender, ICICI Bank, too sold infra bonds for about Rs 39 billion in early September. Last year, RBI facilitated long-term lending in infrastructure and affordable or low cost housing.
"We are yet to conclude on the final issuance deal," MS Raghavan, chairman and managing director, IDBI Bank, told ET, confirming the move. The bank may do away with the issuance if it doesn't get the right pricing. "We have already received bids," the CMD added.
The interest rate is apparently set at 8.74 per cent, but the bank chairman has not yet approved it. SBI Capital Market is the sole arranger of the issuance, three people familiar with the matter said. The Employees' Provident Fund Organisation (EPFO) is likely to be the largest investor in the issuance.
Ratings agency Crisil has assigned an AA+/Stable rating to the bond issuance.
The central provident fund body receives interest payment in a wide range of about Rs 50-80 billion on Special Deposit Scheme, launched by the government in July 1975, on the first day of every calendar year.
Earlier, in September last year, IDBI Bank mopped up Rs 10 billion by issuing infrastructure bonds. The coupon or interest rate was at 9.5 per cent with similar maturity. This time, the bank would be better-off with cheaper rates as the benchmark 10-year government bond yield is now hovering 64-68 basis points lower compared to September.
About a month ago, country's third-largest private sector lender, Axis Bank, collected Rs 57.05 billion by selling infrastructure bonds offering 8.85 per cent rate. Those were rated as triple-A by CRISIL & ICRA. India's largest private sector lender, ICICI Bank, too sold infra bonds for about Rs 39 billion in early September. Last year, RBI facilitated long-term lending in infrastructure and affordable or low cost housing.
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