Union Bank of India on Monday said that it will raise Rs 2,200 crore through two separate tier-2 bond issues.
The bank will raise Rs 1,500 crore through bonds maturing in 15 years and another Rs 700 crore via bonds maturing in 10 years, the lender said in an exchange filing. The longer term bonds has a coupon rate of 7.85% per year while 10 year bonds has a coupon of 7.80%. The bonds of both tenures will have a face value of Rs 10 lakh each.
The bank’s domestic yield on advances is at 7.76% as of September 30 while its global yield on advances stands at 7.65%.
The bank has set November 29 as the date of allotment of the bonds, which are rated AA+ by Care Ratings with positive outlook. Icra Ratings has issued a rating of AA+ with stable outlook.
The bank has the board approval to raise Rs 8,100 crore in the current financial year, of which the bank will raise Rs 3,800 crore through qualified institutional placement (QIP) and the remaining Rs 4,300 crore will be raised through tier-2 bonds, A Manimekhalai, md & ceo of the bank had said in a post earnings meeting, adding that, the lender will raise more funds through bond issue in Q3FY23. Prior to the latest bond issue, the bank had already raised Rs 1,320 crore through bond issue. The bank is planning to raise funds via share issue in Q3FY23 or Q4FY23, she had said.
The bank has a capital adequacy ratio of 14.50% as of September 30 as against 13.64% a year ago and 14.42% a quarter ago. The bank is comfortable with the current level of capital adequacy, she said. The bank’s tier-2 capital stands at Rs 12,700 crore while additional tier-I capital is at Rs 9,003 crore as of September 30.