Bank of India raises Rs 1,500 crore through additional Tier 1 bonds

Public sector lender Bank of India has raised capital worth Rs 1,500 crore through additional tier I bonds (AT1 bonds) to meet regulatory norms and support business growth.

Following a strong response, the coupon was fixed at a finer rate of 8.57 per cent against an indicative range of 8.75-9.0 at the start of bidding, bond dealers said.

Its Capital adequacy ratio (CAR) stood at 15.51 per cent as of September 30, 2022. With capital raising via  AT1 bonds, CAR will be close to 16 per cent, bank executives said. Its loan book rose by 17.89 per cent Year on Year (YoY) to Rs 4.93 trillion at the end of September 2022.

The Mumbai based lender is likely to come up with another offering of AT1 bonds before the close of the current financial year (FY23). The board of directors has given approval for issuance of AT1 bonds upto Rs 2,500 crore. Bank has raised Rs 1,500 crore and the balance would be raised in follow-on offering, bank executives said.  

The base issue size was Rs. 500 crore with green-shoe option of Rs 1,000 crore. The issue received an overwhelming response from bidders by way of bids of a whopping Rs 6,367 crore (from 47 active bidders) which was 12 times of the base issue size, BOI said in a statement.

The rating assigned to these AT-1 Bonds by CRISIL is ‘AA Stable’ and ‘AA Positive’ by Acuite Rating.