Mumbai: Canara Bank (CanBank) and Bank of Maharashtra are looking to raise up to ₹4,500 crore in bond sales amid surging demand for credit in a rapidly expanding economy.
Canara Bank plans to carry out an issuance of additional tier-1 (AT-1) bonds with a base size of ₹1,000 crore and a greenshoe option of ₹2,500 crore on December 7, sources aware of the development told ET. The bonds are rated AA+/Stable by rating agencies Crisil and ICRA.
Bank of Maharashtra is looking to raise up to ₹1,000 crore worth of funds through sale of a tier-2 bond around December 12-13, sources said. The bank's bond sale is likely to have base size of ₹250 crore and a greenshoe option of ₹750 crore. Bonds will likely be of 10-year maturity with a five-year call option, sources said.
With demand for credit remaining strong, banks have been looking to tap the bond markets and raise funds to finance the loan growth. As on November 17, bank credit growth was at 20.6% YoY while deposit growth was at 13.6% over the same period, latest RBI data showed.
The BJP's poll victories announced on Sunday have taken Indian equity gauges to records on expectations that an even stronger mandate for PM Narendra Modi will minimise the need to adopt populist measures.
Federal commitment to the growth agenda and fiscal prudence are boosting demand for private investments in capital assets, and that, in turn, is pushing credit growth despite a 250-basis-point cumulative increase in policy rates in the current cycle of rate hardening.
Separately, state-owned India Infrastructure Finance Company (IIFCL) is looking to raise up to ₹1,000 crore through the sale of 15-year bonds on December 6, sources said. IIFCL's bonds are rated AAA by ICRA and India Ratings. The bonds have a base size of ₹200 crore and a greenshoe option of ₹800 crore, sources said. Non-banking financial company Tata Capital Financial Services (TCFSL) is looking to raise up to ₹2,500 crore through secured, redeemable, non-convertible debentures. The bonds will mature in December 2033, while bidding is on December 6, sources said.