Mumbai, March 17 -- A day after securing board approval to raise Rs.20,000 crore via infrastructure bonds, Union Bank of India announced its plans to issue the first Rs.7,500 crore tranche of 10-year bonds on Friday, three merchant bankers told Mint.

The issue will have a base size of Rs.3,000 crore and a greenshoe option of Rs.4,500 crore. The bonds are rated AAA by Care Ratings.

On 13 February, Mint reported that state-run lenders are preparing to tap the debt market through infrastructure bonds in March.

Banks and financial institutions raise funds through infrastructure bonds to finance their long-term infrastructure projects. These bonds have a minimum maturity of seven years and are eligible for certain regulatory exemptions, suc...