Axis Bank sets coupon for dollar AT1 bonds at 4.1%, raises $600 mn

This is 30 basis points lower than the initial guidance of 4.4 per cent

Axis Bank has fixed the price for dollar denominated additional tier I bonds (AT1 bonds) at 4.1 per cent, 30 basis points lower than the initial guidance of 4.4 per cent. The Indian private sector lender is raising about $600 million through AT1 bonds.

This is second AT1 bond offering in international market from Indian banking pack within fortnight. Last week, the country's largest private sector lender, HDFC Bank, raised $1 billion via AT1 bonds priced at 3.7 per cent.

Banking sources said the peak order book for Axis Bank issue was $2.3 billion. Some of prominent investors include Blackrock, Fidelity. Bankers to issue included HSBC, BNP Paribas, BOFA Securities, Citigroup and JP Morgan.

Bonds are being issued from Axis bank's GIFT City Branch, Ahmedabad. This is first ESG themed AT1 bond offering from India. The proceeds would be used for green and social projects.

Its Capital Adequacy Ratio (CAR) was 18.67 per cent with tier I of 16.15 per cent and tier II of 2.52 per cent as of June 30, 2021.

Moody's has assigned B1(hyb) rating for AT1 capital securities being issued out of Axis bank's global medium term note (GMTN). The B1(hyb) rating is three notches below Axis Bank “ba1” Baseline Credit Assessment (BCA). This reflects the probability of impairment associated with non-cumulative coupon suspension and the likelihood of high loss severity when the bank reaches the point of non-viability.