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Informist, Monday, Nov. 18, 2024

 

--Sources: Bk of Baroda plans to raise up to INR 35 bln via 15-yr tier-II bond 

--Sources:Bank of Baroda likely to tap mkt with tier-II bond issue next week 

 

By Sachi Pandey

 

MUMBAI – Bank of Baroda is likely to raise funds through tier-II bonds next week, multiple sources in the know told Informist. This could be the first Basel-III-complaint tier-II bond issuance by the country's second-largest public sector bank in the current financial year.

 

While it is certain that the bank will hit the market next week, the amount is yet to be finalised, a person aware of the development said. "I am hearing they are looking to raise 3,500 crore (INR 35 billion) and are now waiting for the final board approval to update on EBP (electronic bidding platform)," a merchant banker told Informist on the condition of anonymity.  

 

According to merchant bankers, the issue is likely to have a base size of INR 10 billion and a greenshoe option of INR 25 billion. "Tentative bidding would be on 27th of November or 28th of November, depending on when they get approval. This would be of 15 years of maturity with a call option of mostly 10-year," the merchant banker added.

 

Earlier this month, rating agencies such as India Ratings and Research and CRISIL Ratings had assigned an 'AAA' rating to Bank of Baroda's INR 35-billion Basel-III tier-II bonds, with a stable outlook. 

 

Merchant bankers expect the coupon on Bank of Baroda's tier-II bonds to be set at around 7.45-7.50%. "Last time, when SBI (State Bank of India) came with tier-II, they got 7.33% levels, so BoB (Bank of Baroda) must be over around 15 bps (basis points) above SBI's tier-II bond," a dealer at a large sized private sector bank said. 

 

In a media call after the announcement of the bank's financial results for the quarter ended September, Managing Director and Chief Executive Officer Debadutta Chand had said the bank was very comfortable in terms of capital. "As far as the AT-1 (additional tier-I) and tier-II (bonds), we have announced to the market that we intend to raise 7,500 crores (INR 75 billion) this financial year. As of today, we have not raised anything. So, any raise would be in the next two quarters. But on the core equity, no plan to raise any money this year."

 

As of Sept. 30., the bank's capital adequacy ratio stood at 16.26%.

 

In 2023-24 (Apr-Mar), Bank of Baroda had raised a total of INR 50 billion through two tranches of 10-year tier-II bonds, at coupon rates of 7.75% and 7.57%.

 

So far this financial year, the bank has only raised funds through infrastructure bond issuances. The public sector bank had raised INR 100 billion through two tranches of infrastructure bonds maturing in 10 years at a coupon rate of 7.26% and 7.30%. 

 

On Monday, shares of the bank closed almost flat at INR 241.40 on the National Stock Exchange.  End

 

Edited by Avishek Dutta

 

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