The IREDA bond issue has a base size of Rs 500 crore and a greenshoe option of Rs 1,500 crore. Greenshoe is an over-allotment option that allows companies to issue more bonds or raise more capital than the underlying issuance size.
The bond market witnessed strong fundraising activity on Wednesday with Bank of Baroda, National Bank for Agriculture and Rural Development (NABARD) and Indian Renewable Energy Development Authority (IREDA) ) raised 13,500 crores rupees through bond issue. The issues by NABARD and Bank of Baroda were fully subscribed, while IREDA raised Rs 1,000 crore against the total issue size of Rs 2,500 crore.
The IREDA bond issue has a base size of Rs 500 crore and a greenshoe option of Rs 1,500 crore. Greenshoe is an over-allotment option that allows companies to issue more bonds or raise more capital than the underlying issuance size.
“As the RBI’s monetary policy tightens the money market, entities are looking for other ways to fund their growth. They are moving from lending to the bond market,” Vikas Goel, managing director and CEO of PNB Gilts, told FE. “Most of the demand for these long-term bonds comes from insurance companies,” he added.
NABARD raised ₹ 10,000 crore through 10-year bonds, at a nominal interest rate of 7.65%, while Bank of Baroda raised ₹ 2,500 crore through tier 2 bonds at a nominal interest rate of 7 .75%. The action will continue in the bond market this week. The National Bank for Infrastructure Finance and Development (NaBFID) will raise 15-year infrastructure bonds worth ₹ 10,000 crore on Thursday. Punjab National Bank is also planning to raise 3,000 crore by the end of this month.
Small Industries Development Bank of India (SIDBI) plans to mobilize up to 5,000 crore, while Kerala Infrastructure Investment Fund Board (KIIFB) will mobilize 1,499.96 crore this month.
“Investor demand is expected to remain high for long-term bonds. We are at the peak of the interest rate cycle and investors want to benefit from higher interest rates,” said a broker at a private bank.
HDFC Bank on Monday raised ₹ 7,425 crore through non-convertible bonds to fund infrastructure and affordable housing projects.
The Bank on Wednesday issued and allotted, on a private placement basis, 7.71% unsecured, redeemable, long-term, fully paid and non-convertible debentures, in the form of bonds, the bank said Wednesday in a press release. Shriram Finance sold two bonds worth ₹2,000 crore and Tata Projects on Monday issued two bonds totaling ₹1,150 crore.
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