SIDBI and KIIFB to float bonds worth Rs. 6,500 crore
What's the story
The Small Industries Development Bank of India (SIDBI) and Kerala Infrastructure Investment Fund Board (KIIFB) will issue bonds totaling Rs. 6,499.96 crore tomorrow (December 21). SIDBI aims to raise up to Rs. 5,000 crore, including Rs. 3,500 crore in greenshoe, while KIIFB plans to secure Rs. 1,499.96 crore. These bonds will be open for bidding on the electronic platforms of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Details
SIDBI bonds to mature in 2027, KIIFB's in 2033
SIDBI's bonds are set to mature on May 14, 2027, with a 3-year-4-month-22-day tenure, while KIIFB's bonds will have a 10-year maturity period. The minimum application size for SIDBI's bonds is Rs. 1 lakh, with multiples of Rs. 1 lakh during the bidding process. The pay-in date for both bonds is December 22, when the exchange of funds as well as bonds between issuers and investors occurs.
What Next?
Bond ratings
Both SIDBI and KIIFB bonds have received ratings from various agencies. SIDBI's bonds have been rated 'AAA' by CRISIL and CARE Ratings, while KIIFB's bonds received an 'AA (CE)' rating with a 'Stable' outlook from India Ratings and ACUITE Ratings.
Details
What about the coupon rate?
KIIFB's term sheet reveals that its bonds have a fixed coupon rate of 8.95% or 9.25% XIRR (extended internal rate of return), with quarterly payments to investors. If the rating downgrades by one notch (i.e., AA-), a step-up of 25 basis points will be applied. In case of a two-notch downgrade (A+ or below), investors can choose between a 25 basis points step-up or exercising a put option within 30 days of the rating downgrade.