Axis Bank on Wednesday raised Rs 5,705 crore through 10-year infrastructure bonds. Sidharth Rath, president, Treasury, Business Banking & Capital Markets, Axis Bank, told FE the issue saw close to 40 investors, with an average ticket size of Rs 150 crore, with IFC picking up Rs 600 crore.
A sharp fall in the yields on government bonds, over the past few months, has benefited Axis Bank, which priced its infrastructure bonds at 8.85%, lower than the 9.25%, ICICI Bank had to pay to for similar bonds issued in September.
The benchmark 10-year government bond yield has dropped more than 60 bps in the last three months.
ICICI Bank raised Rs 3,900 crore through similar bonds at a coupon of 9.25% in the first week of September. The government bond yield at that time was at 8.52%.
LIC Housing Finance and International Finance Corporation are some of the key investors, Axis Bank said in a release. IFC, a subsidiary of World Bank, invested Rs 600 crore in the bond issue, Rath added.
RBI had allowed banks to raise infra bonds and lend the funds raised to infrastructure projects and affordable-housing projects. The bonds are exempt from the norms of CRR and SLR. Rath said Axis Bank will use part of the proceeds to give fixed rate loans for purchases of affordable homes. The bonds are rated AAA by Crisil and Icra.