Axis Bank launches offshore AT1 bond offer to raise up to $1 bn

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MUMBAI: Personal sector lender Axis Financial institution Ltd has launched an offshore extra tier 1 (AT1) bond providing to boost as a lot as $1 billion, in response to deal phrases seen by Mint.

Axis Financial institution will use the proceeds for inexperienced and social tasks. The financial institution has set an preliminary value steerage of 4.4% for the bonds. HSBC, BNP Paribas, BofA Securities, Citigroup, J.P. Morgan, Customary Chartered Financial institution are managing the bond providing.

Axis Financial institution is the second Indian lender this yr to faucet abroad debt markets to boost funds via AT1 bonds. HDFC Financial institution lately raised $1 billion.

AT1 bonds, additionally known as perpetual bonds, carry no maturity date however have a name possibility. The issuer of such bonds might name or redeem the bonds whether it is getting cash at a less expensive charge, particularly when rates of interest are falling.

The curiosity in tapping the offshore bond markets comes after widespread losses to particular person buyers who invested in Sure Financial institution’s AT1 bonds, which prompted the Securities and Trade Board of India to introduce stricter funding guidelines for native gross sales of such devices, resulting in a drying out of such choices.

State Financial institution of India (SBI) was the primary lender to boost capital via offshore AT1 bonds in 2016. In June 2021, India’s largest lender mentioned it’s going to increase AT1 capital by issuing Basel III compliant debt devices in greenback or rupee via a public provide or non-public placement to abroad and/or Indian buyers this fiscal.

Many corporations have been tapping the offshore debt markets to boost cash to benefit from low rates of interest in developed markets and diversify their sources of funding. SBI, UltraTech Cement, Adani Inexperienced Vitality, Shriram Transport Finance, and Adani Electrical energy Mumbai have raised capital via offshore bonds in 2021.

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