Bank of India raises Rs 2,500 crore via 10-year Tier-2 bonds at 7.28% coupon

Market participants said that the coupon set on the bonds is 60-70 basis points higher than the current secondary market yield on the similar tenure government securities.

State-owned lender, Bank of India on December 10 raised Rs 2,500 crore through Tier-II bonds maturing in 10-year at a coupon rate of 7.28 percent, market sources said.

The bonds have received 4 bids with a cumulative value of Rs 2,280 crore at 7.27 percent coupon, 4 bids with a cumulative value of Rs 2,655 crore at 7.28 percent, 4 bids with a cumulative value of Rs 3,055 crore at 7.29 percent, 8 bids with a cumulative value of Rs 3,562 crore at 7.30 percent, and 3 bids with a cumulative value of Rs 3,882 crore at 7.31 percent, source said.

The bonds have a call option at the end of 5th year and thereafter every year.

The bank have planned to raise Re 2,500 crore, including 1,500 crore greenshoe option.

Pay in and allotment of the bonds will take place on December 12. Pay in is the date when investors and issuer exchange bonds and money.

Bank have received a 'AA+' ratings with 'Stable' outlook from CARE ratings and ICRA ratings.

Market participants said that the coupon set on the bonds is 60-70 basis points higher than the current secondary market yield on the similar tenure government securities.

The yield on the government bond climbed in the last few sessions, tracking movements in OIS and global bond yields.

Since last week, the 10-year benchmark bond yield have risen by eight basis points (bps) and trading at 6.58 percent.

There is growing opinion among market participants that the RBI's rate easing cycle is largely over and that is leading to rising bond yield, market experts said.