Corporation Bank to raise Rs 200 crore through perpetual Tier-I bonds
The coupon rate on the bond is 9.29% per annum
Mangalore-based Corporation Bank is looking to raise Rs 200 crore through unsecured innovative perpetual non-convertible Tier I Bonds, issued in the form of promissory notes on a private placement basis.
The coupon rate on the bond is 9.29% per annum, the bank said in a notice on the BSE, on Thursday.
Public sector banks have been raising funds to shore up their Capital Adequacy Ratio ahead of Basel III norms, which will be implemented beginning January 2013.
Earlier this week, Union Bank of India raised about Rs 1,100 crore by issuing Tier I and Tier II Bonds. Its Tier I bonds carried the same coupon rate as that of Corporation Bank, that is 9.29%.
Other banks that have raised capital through perpetual bonds include United Bank of India, which raised Rs 300 crore and IDBI Bank which raised Rs 450 crore. Indian Overseas Bank is also looking to raise Rs 800 crore.
Perpetual bonds are with no maturity date. These bonds are not redeemable but the bondholder receives a steady stream of interest forever.
December is the last month in which banks can boost their Tier I capital by way of perpetual bonds. From January 1, 2013 when the implementation of Basel III norms will begin, perpetual bonds will not qualify for Tier I capital.