With bond yields hardening, public sector lender on Friday raised Rs 974 crore in capital through additional tier I AT 1 bonds against an indicative amount of Rs 2,000 crore.
Bond market sources said the coupon for was firmed up to 8.75 per cent, a level that the bank was comfortable with. After five years, the call option is available. While the money was available at higher yields, there was no urgency to go beyond 8.75 per cent, as the bank's capital position was comfortable. The base issue size was Rs 500 crore with the green issue of Rs 1,500 crore.
In December 2022, the bank had raised over 500 crore via 8.4 per cent.
The plan to raise 12,000 crore in capital was approved by the board of 1 9 Rs 3,500 crore and tier bonds of Rs 6,500 crore in the current financial year. The investor presentation said that it raised 3,240 crore via and Rs 4,000 crore through tier II bonds until the end of December 2022.
The capital adequacy ratio of Delhi-based PNB stood at 15.15 per cent at the end of December 2022. The Common Equity tier was 10.84 per cent and the AT 1 level was 1.37 per cent.
Bond dealers said that many sector players and corporates have lined up fundraising plans before the end of the financial year March 2023, which has led to supply glut while demand is limited. Bond dealers said that the Reserve Bank of IndiaBank of India is a factor in the market's tightness due to a variety of factors.
The board of lenders is going to meet on March 29, 2023 to discuss the proposal to raise capital in the next financial year Fy 24 through issuance of additional Tier 1 Bonds and Tier-II Bonds. These Basel Ill-compliant bonds could be issued in one or more tranches.