The state’s leading financial institution, Kerala Financial Corporation (KFC) hit the BSE electronic bidding platform on Friday to raise Rs 250 crore from the debt market by issuing non-SLR bonds of Rs 100 crore, with a greenshoe option of Rs 150 crore, on private placement basis.
The bonds, rated AA (SO) by two RBI and SEBI approved rating agencies with a stable outlook for investment, would have a tenure of ten years bearing a coupon rate payable semi-annually and be redeemable from the sixth year.
Tomin J Thachankary, CMD of KFC, said they have been issuing bonds since 2011 and this is the seventh such launch.
“KFC is the only PSU under Kerala Government and the only SFC in the country raising funds without government guarantee. We are going to the market based on the strength of our financials,” said Thachankary.
The KFC has raised Rs 1600 crore so far from the bond market in seven issues of which Rs 415 crore has been redeemed.
Initially, KFC was raising bonds with a state government guarantee, where they had to pay a Guarantee Commission of 0.75 percent plus GST thereby increasing the cost by one percent.
Since 2016, KFC has been raising funds without a government guarantee, based on the strength of its balance sheet.
“The bond market has been volatile due to various reasons and there is extremely less liquidity for bonds, less than AAA credit rating now. Most of the similar rated issues were bid above eight percent coupon rate and we are expecting rates less than eight percent,” added Thachankary.
KFC aims to build the loan portfolio to a level of Rs 4000 crore by the end of this fiscal from the present level of Rs 3300 crore and is mulling another bond issue by the end of this year.