The Kerala Infrastructure Investment Fund Board (KIIFB) is set to raise up to ₹1,500 crore, including a ₹1,000 crore greenshoe option, by issuing separately transferable redeemable principal part (STRPP) bonds. The bonds will carry maturities ranging from four to ten years, according to two merchant bankers familiar with the deal.
On August 5, the agency is expected to begin accepting bids from bankers and investors. The interest rate offered is 9.67%, with payments made quarterly.
The STRPP bonds are backed by an irrevocable guarantee from the Kerala state government. Despite this backing, the instruments are rated AA(CE) by India Ratings, suggesting a moderate credit enhancement based on external support.
The ₹1,500 crore figure includes both the base issue and the greenshoe portion, which allows KIIFB to retain additional subscriptions if demand exceeds expectations.
While KIIFB has not issued an official comment yet, the move appears to be part of its broader strategy to fund infrastructure development across Kerala through market borrowings. The state agency has tapped into the bond market multiple times in recent years to finance roads, power, education, and healthcare projects.
The use of STRPP bonds also gives investors the flexibility to trade the principal component of the bond separately, potentially attracting a broader investor base looking for fixed-income assets with state backing.
