National Bank for Financing Infrastructure and Development (NaBFID) on Wednesday raised Rs 5,000 crore through one-year certificate of deposit (CD) at a coupon of 6.95%. This is the first such issuance by NaBFID. Market participants said the pricing was better compared to other all-India financial institutions (AIFIs).
“For a debut issuance, pricing 5–7 basis points finer than comparable AIFI issuers such as Nabard and Sidbi reflects both investor confidence and strong demand depth in the money-market segment,” said Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap LLP.
“The fact that the issue was reportedly oversubscribed and closed at a tighter spread indicates that NaBFID is being perceived not merely as a new issuer, but as a high-quality, quasi-sovereign credit with a clear policy mandate,” Srinivasan added.
Banks have been aggressive in the CD space this year. They raised Rs 1.34 lakh crore in the fortnight ended February 15, taking the outstanding issuances to a record Rs 6.62 lakh crore, according to the Reserve Bank of India data.
The higher supply pushed CD rates up to more than 7% despite a 125-bps rate cut. Currently, one-year CD is at 6.78%, as per Bloomberg.