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Tuesday, March 24, 2015

PNB raises Rs. 1,800 cr from bonds to fund infra projects

State—owned Punjab National Bank (PNB) today announced raising Rs. 1,800 crore through long-term bonds for funding infrastructure projects.

“The bank has raised Rs. 1,800 crore via long-term bonds for infrastructure project finance and affordable housing in the nature of debentures,” Punjab National Bank (PNB) said in a statement.

The 10-year bonds were issued at an annual coupon rate of 8.35 per cent on private placement basis on March 24, 2015, the statement said.

Shares of PNB closed at Rs. 161.60 per unit, down 0.95 per cent on the BSE.

In order to encourage infrastructure development and affordable housing, RBI last year exempted long term bonds from mandatory regulatory norms like cash reserves ratio (CRR), statutory reserves ratio (SLR) if the money raised is used for funding of such projects.

CRR is the portion of deposits which the banks are required to have in cash with the central bank.

SLR is the portion of deposits banks must invest in government bonds.

Rules were relaxed in pursuance of Finance Minister Arun Jaitley’s Budget speech in which he had said “banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring to absorb potential adverse contingencies, sometimes known as the 5/25 structure”.

Under the 5/25 structure, bank may fix longer amortisation period for loans to projects in infrastructure and core industries sectors, say 25 years, with periodic refinancing, say every 5 years.

Last month, the bank had raised Rs. 1,000 crore through bonds on private placement basis. The long term bonds were issued at an annual coupon rate of 8.23 per cent.

Subsequently, it raised Rs. 1,500 crore through Basel III compliant perpetual debt instruments in the nature of debentures through private placement.

Source : Thehindubusinessline


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