Canara Bank’s inaugural issuance of Long Term Infrastructure Bonds exceeded expectations by generating Rs 5,000 crore ($67.8 million), surpassing the base issue size of Rs 1,000 crore and the green shoe option of Rs 4,000 crore. The strong market interest was reflected in the bids amounting to over Rs 14,180 crore, demonstrating the investor confidence in Canara Bank. One possible reason for this robust response could be the bank’s steady revenue growth and financial stability, with a revenue growth of 3.21% in LTM2023.Q2 and a market cap of 1.23B USD.
The bonds issued by Canara Bank carry an attractive annual coupon rate of 7.54%, which is favorable in the current financial climate. Additionally, the bonds received high ratings of “AAA/Stable” from leading agencies CARE Ratings Limited and India Ratings & Research Ltd. This positive rating further contributed to the successful issuance of the bank’s debut Long Term Infrastructure Bonds.
Investors’ enthusiastic response to Canara Bank’s entry into the Long Term Infrastructure Bonds market highlights the market’s appetite for high-yield debt instruments, particularly those with a strong credit rating. Furthermore, this successful issuance indicates a positive outlook for Canara Bank’s future fundraising endeavors in this segment. The bank’s prominence in the Banks industry and its stockholders’ high returns on book equity have also contributed to the investors’ confidence in the bank’s bond issuance debut, along with its consistent increase in earnings per share.
Overall, Canara Bank’s maiden issuance of Long Term Infrastructure Bonds demonstrated investor confidence and exceeded expectations. The strong market interest and high bids received signify the market’s appetite for high-yield debt instruments backed by a strong credit rating. Canara Bank’s financial stability and performance, along with its positive ratings and prominence in the Banks industry, have further contributed to the success of the bond issuance.