Bank of Baroda raises Rs 5,000 crore via 10-year infra bonds at 7.3%
Summary
State-owned Bank of Baroda (BoB) on Monday raised Rs 5,000 crore through 10-year infrastructure bonds at a coupon rate of 7.3 per cent, according to sources aware of the development. Click here to connect with us on WhatsApp A dealer at a state-owned bank said that the yields on 10-year government securities have fallen, resulting in a lower cut-off rate for BoB compared to the countrys largest lender State Bank of India (SBI). The BoB issue saw strong demand, which is typical for such instruments as pension funds prefer to invest in long-term bonds. Unlike funds mopped up through deposits, for which banks must maintain 4.5 per cent of the amount as CRR with the Reserve Bank of India (RBI) and invest approximately 18 per cent in securities to meet SLR obligations, infrastructure bond proceeds can be fully deployed in lending activities. Meanwhile, Bank of Maharashtra raised Rs 811 crore through a 10-year infrastructure bond issue at a coupon rate of 7.8 per cent earlier this month.