IDBI Bank raises Rs 2,500cr via Basel III compliant AT-I bonds

IDBI Bank today said it has raised Rs 2,500 crore Basel III-compliant additional tier-I (AT-I) bonds.
The Rs 2,500 crore bond issue includes an initial size of Rs 1,500 crore, with an option to retain over-subscription upto Rs 1,000 crore.
The issue has been fully subscribed prior to the closure date, the bank said in a statement.
The issue, opened on September 29, is the first AT-I bond issuance by a bank in the country after RBI modified its Basel III guidelines.
The bond offered an annual coupon of 10.75 per cent and was perpetual in nature with call option after the instrument has run for 10 years.

"This issuance will pave way for other banks to issue tier I bonds in the domestic market and will increase the acceptance of this instrument among the investors," the bank's Chairman and Managing Director M S Raghavan said.

The amount mobilised would be counted as a part of tier I capital and enhance the bank's capital adequacy.
The bonds are rated AA by Crisil and India Ratings.
The arranger to the issue were Axis Bank, Darashaw & Co, ICICI Bank, Trust Investment Advisors and IDBI Capital Market.
Meanwhile, global Fitch Ratings today assigned IDBI Bank's proposed US dollar-denominated senior unsecured debt an expected rating of 'BBB-(EXP)'.

The bond will constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer.
The tenor of the issue is expected to be around five years and the bank plans to use all the proceeds for offshore lending activities.
The bonds will be issued out of the bank's Dubai branch, the rating agency said.