Date:23/02/2007 URL: http://www.thehindubusinessline.com/2007/02/23/stories/2007022303510600.htm

Back Syndicate Bank bond issue sees good demand

Our Bureau

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Bangalore Feb. 22 Syndicate Bank has received overwhelming support for its upper tier-II bond issue that opened for subscription on February 5.

The size of the issue then proposed was Rs 100 crore with a green shoe option of Rs 140 crore. However, the bank said in a statement today that it could mobilise Rs 200 crore.

The bond is priced at 9.30 per cent for 10 years with a 30 basis point increase for another five years in the event of the call option not being exercised. The funds raised through the bond issue are to be used for boosting capital. , since the bank's risk-weighted assets have been on the increase due to acceleration in credit offtake. For the third quarter of this financial year, the bank had reported a credit growth of 48 per cent over the corresponding period of the last financial year

Bankers said that the aggressive pricing was triggered by the spate of high coupon issues. These included the recent bond issue by the housing finance behemoth, HDFC. HDFC recent Rs 200 crore issue with bullet redemption at the end of five years, was priced at 9.20 per cent. HDFC is a "AAA" rated issue. Syndicate Bank is rated one notch lower at "AA+" (double A plus) by Crisil.