“We have received bids for around Rs 6,000 crore, well above our target, and we have decided to retain the bids for the entire Rs 3,500 crore,” a senior bank executive said.
Canara Bank raised ₹3,500 crore through AT1 bonds at a coupon of 7.55%, attracting strong demand ahead of the RBI’s upcoming policy. With expectations of further interest rate cuts, banks are quickly mobilizing money as investors look for higher returns before interest rates potentially fall
The issue includes a greenshoe option of Rs 2,500 crore over the base size of Rs 1,000 crore.
Banks across the spectrum have already started mobilizing resources ahead of the December monetary policy, which could see a further cut in the repo rate by 25 basis points to 5.25%, given record low headline inflation in the current 2012 baseline series, which was introduced in 2015.
“Investors looking to maximize returns before the possibility of further rate cuts are showing good interest in bond issuance,” a market participant said. ICICI Bank on Thursday raised Rs 3,945 crore at 7.40% for 15-year bond, while Axis Bank mobilized Rs 5,000 crore at 7.25% for 10-year instrument the day before.
The RBI has maintained the status quo since August, following a cumulative 100 basis point cut in the repo rate earlier this year
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