In 2 weeks, bank tier-2 bond sales soar past AT-1 issues for whole year

Analysts cite credit growth surge, better risk profile of tier-2 bonds behind the rush

Over the past few months, banks have increasingly turned to the debt markets and raised funds, in order to finance the burgeoning demand for loans amid slower growth in deposits. In the past two weeks, however, a new favourite has emerged when it comes to banks’ debt instruments -- tier-2 bonds.

Data provided by debt market officials showed the quantum of funds raised by banks through tier-2 bonds since November 28 has far outstripped the entire amount issued through additional tier-1 bonds, so far, in the financial year.

Since November 28, banks have issued Rs 35,048 crore worth of tier-2