Canara Bank raises Rs 1,000 cr through Basel-III compliant AT-1 bonds

State-owned Canara Bank on Friday said it has raised Rs 1,000 crore by issuing Basel-III compliant additional tier I bonds.

The bonds carry coupon rate of 8.07 per cent per annum.

The issue received overwhelming response from investors, with bids for more than Rs 3,133 crore against a base issue size of Rs 250 crore and greenshoe option of Rs 750 crore, Canara Bank said in a release.

"Based on the response, the bank has decided to accept Rs 1,000 crore at a coupon rate of 8.07 per cent per annum. The said Tier I bonds are perpetual in nature. However, it can be called back by the issuer after fifth anniversary from the deemed date of allotment or any anniversary date thereafter," the lender said.

Perpetual bonds carry no maturity date, so they may be treated as equity, not debt. To comply with Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.

The bank's additional tier I bonds are rated AA+ by CRISIL Ratings and India Ratings & Research Ltd, the lender said.

This is the third series of additional tier I bond issuance of the bank for the financial year 2021-22, Canara Bank said.

During FY22, the bank has issued Basel-III compliant additional tier-I bonds of Rs 4,000 crore and tier-II bonds of Rs 2,500 crore.