Kotak Bank plans to raise up to Rs 2,500 cr via bonds

Mumbai: Kotak Mahindra Bank is likely to raise up to ₹2,500 crore through the issuance of bonds later this week, marking the first domestic bond sale by a bank this financial year.

The private sector lender is likely to carry out a bond sale with a base size of ₹1,250 crore and a greenshoe option worth the same amount on June 22, sources aware of the development said. The bonds will likely mature in June 2030.

Given a persistently wide gap between credit growth and deposit growth, banks are likely to raise funds through bond issuances in order to finance the demand for loans.


As on June 2, bank credit growth was at 15.4% year-on-year while deposit growth was at 11.8%, the latest RBI data showed.

With government bond yields having declined so far in this financial year, fund-raising through debt by corporates has turned cheaper. Government bond yields are the benchmarks for pricing corporate debt.

While sovereign bond yields have inched up over the past week, the 10-year yield is down 26 basis points since March 31.

REC SCRAPS BOND SALE
REC on Tuesday withdrew a planned sale of perpetual bonds worth up to ₹3,000 crore, sources said.

REC may have scrapped the bond sale due to higher-than-expected yields demanded by investors, sources said.