BoB Raises ₹10,000 Crore Through Green Infra Bond Issuance

State-owned Bank of Baroda (BoB) has raised ₹10,000 crore through a seven-year green infrastructure bond issue, marking the lender’s first such fund raise aimed specifically at financing renewable energy projects.

The bonds were priced at a coupon rate of 7.10% and attracted strong demand from domestic institutional investors. According to people aware of the development, the issue received bids worth nearly ₹16,000 crore, allowing the bank to raise the full ₹10,000 crore, including the greenshoe portion.

Bank of Baroda had initially planned to raise ₹5,000 crore as the base issue with an option to retain another ₹5,000 crore in case of strong demand. The healthy subscription enabled the lender to fully utilise that option.

What Is BoB’s Green Infrastructure Bond Issue?

The seven-year bonds will mature on 5 March 2033. The bidding took place on 4 March on the Electronic Book Provider (EBP) platform of the National Stock Exchange.

These bonds carry annual interest payments and were allocated through a closed bidding process based on a uniform yield. The minimum investment size for participants was ₹1 lakh and in multiples of ₹1 lakh thereafter.

CARE Ratings and ICRA assigned the bonds a ‘AAA’ rating with a stable outlook, reflecting the bank’s government ownership, steady capital position, and diversified loan book.

For Bank of Baroda, the issue represents its first domestic green infrastructure bond transaction.

Where Will The Funds Be Deployed?

The bank plans to use the proceeds to finance renewable energy and environmentally focused infrastructure projects.

According to people familiar with the matter, projects linked to wind power, solar energy, hydroelectric power, and bioenergy are among those identified for funding. Some of the capital will also support infrastructure designed to improve energy efficiency.

The issue was mainly subscribed by long-term institutional investors such as insurance companies, pension funds, and provident funds. Market participants say such investors often prefer longer maturity bonds because they match the duration of their liabilities.

How Does This Compare With BoB’s Previous Bond Issue?

This is the first infrastructure bond issued by Bank of Baroda in 2026. The bank had earlier raised ₹5,000 crore through ten-year infrastructure bonds in January 2025 at a coupon rate of 7.23%.

The latest issue also adds a sustainability focus by linking the borrowing to renewable energy and green infrastructure projects.

Why Did SIDBI Cancel Its Bond Issue?

Though Bank of Baroda was able to raise funds, another financial institution decided not to go ahead with its bond sale.

The Small Industries Development Bank of India withdrew its bond sale of up to ₹8,000 crore because of a mismatch between the expectations of investors and the price offered by the financial institution.

SIDBI had planned to raise ₹2,000 crore, with a greenshoe option of ₹6,000 crore through non-convertible debentures with a maturity of about three years and four months.

Investors were reportedly seeking yields of around 7.27% for the base issue size, which was higher than the yield on comparable recent issuances in the market.

The contrasting outcomes highlight the current preference among large investors for longer tenure, high-quality bonds, which continue to see stronger demand than shorter-duration instruments.

Also Read - IndiGo, SpiceJet Shares Drop As Middle East Conflict Triggers

Investor Takeaway

For investors, the issue signals strong demand for high-rated bank bonds. It also shows Bank of Baroda’s ability to raise large funds when needed.

The proceeds will support renewable energy and green infrastructure lending. This adds a sustainability angle to the bank’s funding strategy.

Sources:

Economic Times

Hindu Business Line