IDBI to launch flexibond-8 issue

IDBI to launch flexibond-8 issue

MUMBAI, FEBRUARY 22: Industrial Development Bank of India (IDBI) on Tuesday said it will issue unsecured bonds to raise Rs 300 crore. The issue, which also has a green shoe option of Rs 300 crore, will open on February 25 and will close on March 10, IDBI said. This is the second tranche of IDBI's flexibonds series in 1999/2000 (April-March). The term lending institution had raised Rs 1500 crore through the earlier tranche floated in July.

IDBI's floating rate flexibond offers 50 basis points over the weighted average yield on 364-day treasury bills. The tenor of this instrument will be five years with a call and put option after three years. The infrastructure tax-saving bond offers 10.25 percent payable annually for three years and is eligible for tax concessions under section 54EA and section 88 of the Income-Tx Act, IDBI said. It had another option offering 10.5 percent for 85 months and with a tax concession under Section 54EB.

Gupta said he was prepared to cut his lending rates if interest rates in the system were lowered and his borrowing costs came down. "If we raise at lower rates we will give (funds) at a lower rate. We are concerned only about margins (spreads between borrowing and lending)," Gupta said.

He said spreads were declining and would hit profitability. "The margins for everybody will come down in the industry. So that way profits will be lower for everybody but we will have to see how different players perform in comparison to each other," he said.