UCO Bank raises Rs 500 crore in AT1 bonds at 9.5%, highest rate in FY23

State-owned UCO Bank on Thursday sold additional tier-1 (AT1) bonds worth Rs 500 crore at a coupon rate of 9.5 per cent, the highest rate paid by any bank so far in the current financial year, sources told Business Standard.

The coupon rate is the rate of interest that is periodically paid out to investors. Analysts said the high coupon rate was driven by factors specific to the issuing entity, tighter financial conditions, and the nature of AT1 bonds as an instrument.

AT1 bonds are a means by which banks augment core equity capital. These instruments are perpetual bonds, which