Canara Bank Plans Rs 250 Crore Bond Issue

Canara Bank today said that it is coming out with its third tranche of Tier II bonds with an issue of Rs 250 crore and a greenshoe option of Rs 200 crore. The object of the issue is to strengthen the capital adequacy ratio of the bank.

The third tranche of Rs 250 crore capital adequacy ratio of the bank to 10.02 per cent from 9.84 per cent. Canara Bank had earlier raised Rs 800 crore in tranches of Rs 500 crore and Rs 300 crore in January 1999 and November 2000, respectively.

The present issue is on a private placement basis and is slated to open on August 24 and close on September 4 or earlier in the event of the amount being realised before the closing date. Crisil has rated the Rs 250 crore bond issue as 'AA+' indicating high safety with regard to timely payment of principal and interest on the instrument.

The tenor of the issue is 67 month and coupon rate is 9.70 per cent payable annually. Canara Bank is also offering demat option to its subscribers.

Earlier, the Union Bank of India launched a tier-2 issue of non-convertible debentures to raise Rs 100 crore today, according to debt dealers. The privately placed bonds have a 69-month maturity and a coupon of 9.80 percent, payable annually, they said. The issue is rated LAA+ by ICRA Ltd, indicating high safety.

The arrangers to the issue are DSP Merrill Lynch Ltd and J M Morgan Stanley.

The bank's capital adequacy ratio stood at 10.86 percent on March 31, above the nine percent required to be maintained as per Reserve Bank of India regulations. Meanwhile, the Gujarat State Road Transport Corporation (GSRTC) launched a private placement of bonds on Monday to raise at least Rs 100 crore, debt dealers said.