Thiruvananthapuram, Jul 11: Kerala Financial Corporation (KFC), a state-based leading financial institution, has successfully raised Rs 250 crore fund from the debt market by issuing Non- SLR Bonds of Rs 100 crore with a green shoe option of Rs 150 crore on private placement basis.
The bonds are rated AA(SO) by two RBI and SEBI approved rating agencies with stable outlook for investment. The bonds, with a tenure of 7 years, will bear coupon rate of 8.99 per cent per annum payable semi annually and will be redeemable from fourth year. “Since 2011 KFC has been issuing bonds and this is the sixth successful launch which underlines the confidence and trust of investors in the credit quality of KFC”, KFC Chairman and Managing Director Sanjeev Kaushik IAS, said.
The Corporation has raised Rs 1350 crore so far from bond market in six issues of which Rs 250 crore has been redeemed so far. Initially the Corporation has been raising bonds with State Government Guarantee, where the Corporation has to pay Guarantee commission @ 0.75 per cent plus GST thereby increasing the cost further by 1 per cent. Since 2016, the Corporation has been raising funds without Government guarantee based on the strength of its balance sheet and the credit enhancement structure underlying the issue.
“KFC is only state PSU raising funds without Government Guarantee. The NBFC bond market has been turbulent since October 2018 post IL & FS crisis and there is extremely less liquidity for bonds less than AAA credit rating. Consequent to the downgrading of various NBFCs/ HFCs, the market has not been favorable even for papers with AAA rating," Mr Kaushik said. "Hence the investors and market participants are extra cautious and extremely selective when investing in bond market. Most of the similar rated issues were bid much above 9 per cent coupon rate and hence it is a great achievement to get the funds below 9 per cent ”, Mr Kaushik added.
“The Corporation aims to build the loan portfolio to a level of Rs.3500 crore by the end of this FY 2019-20, from the present level of Rs.2700 crore, for which the Corporation plan to go for another bond issue by this year end, if the market conditions are favourable, said Premnath Ravindranath, Executive Director of KFC, who is heading Treasury department of the Corporation. (UNI)