Bank of India to raise up to Rs 1,800 crore via Basel-III, Tier-II NCDs

Bank of India is planning to raise up to Rs 1,800 crore through Basel-III compliant Tier-II non-convertible debentures (NCDs), maturing in 10 years.

The NCDs will have a base issue of Rs 1,000 crore, with retain over-subscription option of Rs 800 crore. “Date of the bidding is not fixed yet, but the probable date is September 28 or 29,” an arranger close to the issue said.

Market participants said the bank has fixed a five-year call option on the Basel-III compliant Tier-II NCDs. Crisil and Infomerics Ratings have assigned ‘AA+’ and ‘AAA’, respectively, with ‘stable’ outlook on September 21.

“The assignment of ratings to the proposed Basel-III compliant Additional Tier-II bonds of Bank of India takes into consideration the sovereign ownership with continued support,” Infomerics said in a release.

On April 30, the bank, in a notice to the exchanges, said the board of directors had approved the issue of fresh capital in the form of follow-on public offerings or qualified institutional placement, and Basel-III compliant Additional Tier-I (AT1) bonds (domestic and foreign currency) up to an amount of Rs 3,000 crore. It also approved the issue of Basel-III compliant Tier-II bonds up to an amount of Rs 1,800 crore.

Meanwhile, HDFC Bank will also raise up to Rs 5,000 crore on September 23 through seven-year NCDs.

Experts said banks have returned to the market due to improved appetite and lower rates. Further, good demand from investors is also attracting banks to the bond market.