Mumbai: Axis Bank and are planning to raise about Rs 4,000 crore in perpetual bonds and infrastructure bonds to make use of a window before the Reserve Bank of India’s monetary policy next month that could signal the reversal of ultra-loose policy, said three people familiar with the matter.
Axis Bank is aiming to raise about Rs 2,000 crore via additional tier 1 (AT1) or perpetual papers locally after it tapped overseas investors. Those papers are expected to yield 7.9-8.1 per cent. The funds will strengthen its capital base. The bank’s capital adequacy ratio was at 20.04 per cent in the September quarter.
It reported a net profit of Rs 3,133 crore, up to 86 per cent year-on-year.
“The bank is trying to raise cheap money before it becomes expensive after the December RBI policy,” a senior executive from a financial institution said on condition of anonymity.
Axis Bank raised $600 million through the sale of sustainability-focused AT1 bonds. The dollar-denominated, Basel III-compliant AT1 notes were priced at 4.1 per cent, 0.3 per cent lower than the initial price guidance.
Both Axis Bank and IndusInd Bank did not respond to ET’s emailed queries.
IndusInd Bank has reached out to a few market participants with a proposal of infrastructure bond sale. India’s largest private sector bank by asset size, ICICI Bank, sold its second series of infrastructure bonds on Wednesday, offering 6.67 per cent with a seven-year maturity.
IndusInd Bank grew its loan book 10 per cent year-on-year to about Rs 2.21 lakh crore, reflecting demand for credit. In the preceding June quarter, loans expanded just 6 per cent.
“This will further augment our overall capital adequacy levels. We expect a stable loan growth and asset quality position in the foreseeable future,” IndusInd Bank managing director Sumant Kathpalia said at an analyst call on the September quarter earnings.
While long-term investors, including insurers and pension funds, have the appetite to own infra bonds, lenders are witnessing revival in infrastructure credit. In September, HDFC Bank too tapped the same route, raising Rs 5,000 crore by offering 6.44 per cent.
The problem for infrastructure bonds is the secondary market illiquidity. This in turn keeps shorter duration investors like mutual funds away from it. Large corporate treasuries subscribe to them too.
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