Indian Bank raises Rs 1048 crores via AT-1 bond at 8.44%

In Monday’s bidding, Indian Bank raised Rs 1,048 crores out of the offered Rs 1,500 crores of AT-1 bond at 8.44 percent coupon rate. The bond is a perpetual one with a five-year-call. The closed and uniform bid took place from 11 am to 1 pm today and the pay-in is on 8th December.

Indian Bank had earlier said that it would raise about Rs 1,500-Rs 2,000 crores via Additional Tier-1 (AT-1) bonds in the December quarter to mobilise their resources at a much competitive rate. This was subject to the improvement of the market conditions. Earlier this year, the state-owned bank had scrapped an AT-1 bond issue since the investors were seeking higher coupon than what they had anticipated.

Chief Executive Padmaja Chunduru said, “Indian Bank had no desperation to raise capital as it had enough cushion with a capital adequacy ratio at 13.45%, well over the regulatory minimum of 10.875%.”

“We will raise up to Rs 2,000 crore this year through a combination of Tier-1 and Tier-2 capital, depending upon how credit growth takes place and restructuring of debt happens,” she said and added that the details would be worked outpost second quarter’s end.

“The need for capital has to be reassessed much more periodically now because the conditions are changing every day,” Chunduru added.

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