Kerala Financial Corp hits debt market to raise ₹250 cr

Kerala Financial Corporation (KFC) hit the BSE electronic bidding platform on Friday to raise ₹250 crore from the debt market by issuing non-SLR Bonds of ₹100 crore, with a greenshoe option of ₹150 crore on private placement basis.

The bonds, rated AA (SO) by two RBI and SEBI-approved rating agencies with stable outlook for investment, would have tenure of 10 years, bearing a coupon rate payable semi-annually and redeemable from the sixth year.

Seventh launch from KFC

“KFC has been issuing bonds since 2011, and this is the seventh launch. It is the only PSU in Kerala, and the only State Financial Corporation in the country raising funds without a government guarantee. We are going to the market based on the strength of our financials,” said Tomin J Thachankary, who took over as Chairman and Managing Director early this week.

KFC has raised ₹1,600 crore so far from the bond market in seven issues, of which, ₹415 crore has been redeemed so far. Initially, it raised bonds with a government guarantee where it would pay guarantee commission of 0.75 per cent plus GS, adding the cost further by one per cent. Since 2016, it has raised without guarantee based on the strength of its balance sheet.

Market remains volatile

“The bond market has been volatile due to various reasons, and there is extremely less liquidity for bonds less than AAA credit rating. Most of the similar rated issues were bid at a coupon rate of above eight per cent, and we are expecting rates to settle to below eight per cent,” said Thachankary.

The corporation aims to build the loan portfolio to a level of ₹4,000 crore by the end of this financial year from the present level of ₹3,300 crore, said Premnath Ravindranath, Executive Director. For this, the corporation will go for another bond issue by this year end, provided the present issue goes successful, he added.