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Indian Bank has successfully raised INR 50 billion through the issuance of 10-year infrastructure bonds, with a coupon rate of 7.15%. The fundraising saw participation from investors through bids invited earlier during the day. The bonds carry AAA ratings from domestic credit rating agencies, indicating strong credit quality. Infrastructure bonds are typically used by banks to fund long-term projects while also benefiting from regulatory advantages. This issuance aligns with the broader trend of public sector banks tapping debt markets to support credit growth and infrastructure financing needs.
Indian Bank has accepted bids worth INR 50 billion for its 10-year infrastructure bond issuance, according to bankers familiar with the development. The fundraising was completed after the state-run lender invited bids for both coupon and commitment earlier during the day. Advertisement
The bonds will carry an annual coupon of 7.15%, reflecting current market conditions and investor appetite for long-term fixed-income instruments. The issue has received a AAA rating from domestic credit rating agencies Crisil and Care, indicating a high degree of safety regarding timely servicing of financial obligations.
The total issue size of INR 50 billion includes the base size along with a greenshoe option, which allows the issuer to retain additional subscriptions in case of strong demand. This structure is commonly used in bond issuances to optimise fundraising depending on investor response.
Infrastructure bonds are typically used by banks to raise long-term funds that are directed towards financing infrastructure and development projects. These instruments also offer certain regulatory benefits, such as exemption from reserve requirements, making them an efficient funding route for lenders.
Public sector banks, including Indian Bank, have increasingly turned to bond markets in recent years to diversify their funding sources and manage asset-liability mismatches. Such issuances also support the government's broader push towards infrastructure development by ensuring steady availability of long-term capital.
Indian Bank did not respond to a request for comment on the transaction.
Source Reuters
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