BoB raises Rs 5,000 crore through issue of 10-year bonds at 7.57pc

TBB BUREAU

MUMBAI, JAN 25, 2024

Bank of Baroda (BoB), a state-owned lender, on Thursday announced the successful raising of Rs 5,000 crore through 10-year infrastructure bonds, featuring a coupon rate of 7.57 percent.

The bank received an impressive response from investors, garnering a total of 128 bids amounting to Rs 14,950 crore against the targeted issue size of Rs 5,000 crore.

With a base issue size of Rs 1,000 crore, the bonds included a retain oversubscription option of Rs 4,000 crore, also known as a greenshoe option. This provision, commonly found in underwriting agreements, grants the underwriter the flexibility to sell more bonds than initially planned by the issuer in case of higher-than-expected demand for the security issue.

BoB highlighted that the private placement of these long-term infrastructure bonds witnessed overwhelming demand, resulting in oversubscription. This robust response enabled the bank to price the issue competitively at 7.57 percent, despite prevailing tight liquidity conditions in the market.

The allotment of the bonds occurred on the same day. Notably, the bonds have been assigned an AAA rating with a Stable outlook by CRISIL and India Ratings, reflecting their strong credit quality and stability.