The bank issued 10-year infrastructure bonds at a coupon rate of 7.26%, and the state-run lender received 105 bids worth Rs 14,215 crore for the sale, debt capital market Executives said the issue had a base size of Rs 2,000 crore and a call option of Rs 3,000 crore.
The latest bond sale is the second consecutive issuance of infrastructure bonds by Bank of Baroda in two successive weeks, with the lender raising Rs 5,000 crore at 7.30 per cent through a sale on August 26.
As investors, particularly long-term players, show strong demand for the bank’s bonds, the state lender decided to conduct back-to-back debt sales, dealers said.
On Wednesday, the yield on benchmark 10-year government bonds closed at 6.85%. Sovereign bonds are the benchmarks used to price corporate bonds. credit Growth has persistently outpaced deposit growth over the past two years, putting pressure on lenders to mobilize funds through higher deposit rates or issuances of debt instruments. In this scenario, infrastructure bonds help banks manage their interest rate spreads more efficiently as exemptions from reserve requirements for these instruments reduce the cost of funds. Funds raised through infrastructure bonds are exempt from the regulatory requirement to maintain Cash reserve ratio (CRR) and Regulatory liquidity ratio (SLR) As of August 23, bank deposit growth was 11.3% year-on-year, while credit growth was 15.0%, the latest data released by the Reserve Bank of India showed.
So far in FY25, banks have issued infrastructure bonds worth around Rs 52,500 crore, Treasury executives said. The country’s largest lender State Bank of India has led the pack with total infrastructure bond issuances worth Rs 20,000 crore so far this year.
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