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The National Bank for Agriculture and Rural Development (NABARD) is set to raise up to INR 70 billion through a bond issuance with a tenure of three years and one month. The proposed fundraising includes a base issue size of INR 20 billion and a greenshoe option of INR 50 billion. NABARD has invited coupon and commitment bids for the issue, with bidding scheduled for June 10. The bonds have been assigned the highest credit rating of AAA by both ICRA and CRISIL. The fundraising exercise forms part of the development financial institution's borrowing programme to support its lending and refinancing activities focused on agriculture, rural infrastructure and allied sectors across India.
The National Bank for Agriculture and Rural Development (NABARD) plans to raise up to INR 70 billion through the issuance of bonds maturing in three years and one month, according to market participants familiar with the transaction. The bond sale is scheduled to be launched through a bidding process on June 10 as the development financial institution continues to access debt markets for funding requirements.
The proposed issue comprises a base size of INR 20 billion along with a greenshoe option of INR 50 billion, allowing NABARD to retain additional subscriptions if investor demand exceeds the initial amount offered. The total fundraising capacity under the transaction therefore stands at INR 70 billion.
Bankers involved in the transaction said NABARD has invited coupon and commitment bids from investors and arrangers ahead of the bond issuance. The coupon rate for the securities will be determined through the bidding process and is yet to be finalised.
The bonds will carry a tenure of three years and one month, placing them within the medium-term segment of the domestic debt market. Such issuances are typically subscribed to by banks, insurance companies, mutual funds, pension funds and other institutional investors seeking highly rated fixed-income instruments.
Credit rating agencies ICRA and CRISIL have assigned the proposed bonds a AAA rating, indicating the highest degree of safety regarding timely servicing of financial obligations. The rating is expected to support investor interest in the issue, given NABARD's status as a government-backed development financial institution.
Established to promote sustainable and equitable agriculture and rural development, NABARD plays a significant role in refinancing rural credit institutions, supporting agricultural lending and financing infrastructure projects in rural areas. The institution regularly raises funds through bond issuances to support its lending operations and development programmes across the country.
The latest fundraising exercise comes amid continued activity in India's domestic bond market, with government-owned entities, financial institutions and corporates tapping investors to secure medium and long-term funding. Market participants will closely watch the bidding process to assess investor appetite and prevailing borrowing costs in the current interest rate environment.
NABARD had not responded to a request for comment on the proposed transaction at the time the market details emerged. The final issue size and coupon rate will be determined following the completion of the bidding process.
The planned bond issuance adds to the pipeline of debt market transactions being undertaken by public sector and development finance institutions as they seek to mobilise capital for lending, infrastructure financing and sector-specific development initiatives across India.
Source - Reuters
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