Kerala Financial Corporation raises Rs 250cr from debt market

Thiruvananthapuram: Kerala Financial Corporation (KFC) has raised Rs 250 crore from the debt market by issuing non-SLR Bonds of Rs 100 crore.

The bonds would have a greenshoe option of Rs 150 crore on private placement basis, a KFC press release said.

The bonds rated AA(SO) by two RBI and SEBI-approved rating agencies with a stable outlook for investment, would have a tenure of seven years and bear a coupon rate of 8.99 per cent per annum payable semi-annually and be redeemable from the 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," its chairman and managing director Sanjeev Kaushik said.

KFC has raised Rs 1,350 crore so far from the bond market in six issues of which Rs 250 crore has been redeemed so far.

Initially, it had been raising bonds with a state government guarantee, where the KFC has to pay a guarantee commission at 0.75 per cent, besides GST, thereby increasing the cost further by 1 per cent.

Since 2016, KFC has been raising funds without government guarantee based on the strength of its balance sheet and the credit enhancement structure underlying the issue, a press release said.

KFC is the only state PSU is raising funds without a 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 favourable even for papers with AAA rating, he said.

Hence the investors and market participants are extra cautious and extremely selective when investing in the bond market, he said.

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, Kaushik said.

The corporation aims to build the loan portfolio to a level of Rs 3,500 crore by the end of this FY from the present level of Rs 2700 crore," executive director of KFC Premnath Ravindrananth, who is also heading its treasury department.

For this, the corporation plans to go for another bond issue by this year-end if the market conditions are favourable, he said.