Sources told Business Standard that the private sector lender is expected to raise up to 5,000 crore through the issuance of long-term bonds on Thursday.
The bonds, which are likely to have a maturity of seven years, have a base size of Rs 1,000 crore and a greenshoe option of Rs 5,000 crore, according to the sources. The securities are unsecured long-term bonds in the nature of debentures.
A source said it is likely that the bond's coupon will be set at 7.63 per cent. The yield on the 10 year benchmark government bond was at 7.25 per cent on Tuesday, while the most liquid seven-year government bond closed at 7.22 per cent.
Sources said that another large private lender, Axis Bank, was looking to raise funds through the issuance of bonds worth Rs 5,000 crore.
A large insurance company is trying to get an infra bond issue placement. It depends on the response from the insurance company on the anchor amount and their views on pricing, the source said.
Bond issuances have recently been part of a spree of capital raising. This comes at a time when bank credit off-take continues to sustain near-historic highs, which has put pressure on to mobilise funds to the loan demand due to slower deposit growth.
The country's largest lender, the State Bank of IndiaBank of India, sold 10 year bonds worth 10,000 crore at a coupon of 7.51 per cent.
In October, the ICICI bank was said to have sold Rs 4,000 crore worth of seven-year bonds at 7.6 per cent.
The growth in Bank credit has accelerated during the financial year, which is a positive sign that economic activity is picking up, but is challenged by slower growth in deposits. In this context, it is important to see where credit growth is coming from, according to Bank of Baroda's economists.