Punjab & Sind Bank secures Rs 3,000 cr via 10 yr infra bond at 7.74%

IIFCL Rs 1,290 crore in two tranches with varying maturities

State-owned Punjab & Sind Bank on Wednesday raised Rs 3,000 crore through 10-year infrastructure bonds at a coupon rate of 7.74 per cent, said sources aware of the development. The infrastructure bond issue had a base size of Rs 500 crore and a green shoe option of Rs 2,500 crore. It was rated “AA” by domestic rating agency CRISIL and India Ratings.

 

“Bank received total bids amounting to Rs 6,031 crore in an overwhelming response from investors and the issue was oversubscribed by 12.06 times against the base issue size of Rs 500 crore,” the bank said in a statement.

 

Market participants noted that Punjab & Sind Bank’s infrastructure bond issue was priced very tightly, especially given that other issuers are not raising the full amount as they are unable to secure their desired rates.

 

IIFCL raises Rs 1,290 crore

 

India Infrastructure Finance Company (IIFCL), which was eyeing to raise Rs 3,000 crore in two tranches with varying maturities, has secured Rs 740 crore through bonds maturing in three years at 7.74 per cent. Additionally, it raised Rs 550 crore through 10-year bonds at 7.35 per cent, sources said.

 

Meanwhile, state-owned PFC is tapping the debt capital market next week to raise Rs 6,000 crore in two tranches with bonds maturing in 15 years and 5 years. Additionally, Small Industries Development Bank of India  is eying to raise Rs 4,000 crore through bonds maturing in 4 years and five months. “The bond market witnessed a surge in primary issuances from Public Sector Banks  and Public Sector Undertakings this month, as pension and provident funds hurried to meet regulatory investment mandates amid continued tight liquidity conditions, despite the recent CRR cut. However, demand-supply dynamics indicate stress, with secondary markets leaning towards a selling bias,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.

 

“AAA-rated issuers like REC and IIFCL displayed rate discipline, rejecting bids beyond their pricing comfort and accepting limited amounts. On the other hand, Punjab & Sind Bank (rated AA) surprised the market by securing aggressive bids at 7.74 per cent for its Rs 3,000 crore infrastructure bond issuance, which attracted long-term investors due to its regulatory benefits and the rarity of PSB issuances in this segment. The market is grappling with tight liquidity, yet issuers cautious, highlighting an inflection point in pricing power between issuers and investors,” he said.

 

Separately, in an exchange filing on Wednesday, state-owned Bank of Baroda said it will raise Rs 10,000 crore through long-term bonds for financing of infrastructure and affordable housing in single or multiple tranches during FY25.

 

Earlier this week, REC raised Rs 2,195 crore through bonds of different maturities. The state-owned firm has raised Rs 575 crore via bonds maturing in 15 years at a coupon rate of 7.14 per cent. And it has raised Rs 1,620 crore at 7.10 per cent through bonds maturing in 10 years and four months. National Housing Bank raised Rs 3,900 crore at 7.20 per cent through bonds maturing in 82 months.