BoI, BoB mop up ₹ 8,500 cr via bonds amid strong demand

Bank of India and Bank of Baroda Issuing Infrastructure Bonds

• State-owned Bank of India raised ₹ 5,000 crore through a 10-year infrastructure bond issuance at a coupon rate of 7.41%.
• Bank of Baroda secured ₹ 3,500 crore by issuing Basel III-compliant Tier-2 bonds at the same coupon rate.
• Bank of Baroda’s Tier-2 bond issuance had a base size of ₹ 1,000 crore and a green shoe option of ₹ 2,500 crore.

Infrastructure Bonds

• Issued by PSUs, banks, or private corporations to fund infrastructure projects.
• Features include long-term maturities, periodic interest payments, and tax benefits.
• Infrastructure bonds are debt securities issued by entities like PSUs and banks to finance infrastructure projects.
• These bonds have long-term maturities and are used to fund projects like highways, bridges, tunnels, and public transportation systems.
• The proceeds are earmarked for infrastructure development, allowing entities to raise capital without immediate financial strain.
• Infrastructure bonds differ from tax-saving infrastructure bonds, which were introduced in 2010 but discontinued in 2013-14.