CALCULATE YOUR SIP RETURNS

Bank of India Raises ₹2,500 Crore via Tier-II Bonds at 7.49% Amid Strong Demand

26 September 20242 mins read by Angel One
Bank of India raised ₹2,500 crore through tier-II bonds at 7.49%, boosting its capital adequacy. The bank plans to raise more through tier-I and infrastructure bonds.
Bank of India Raises ₹2,500 Crore via Tier-II Bonds at 7.49% Amid Strong Demand
ShareShare on 1Share on 2Share on 3Share on 4Share on 5

State-owned Bank of India raised ₹2,500 crore on Wednesday by issuing tier-II bonds at a coupon rate of 7.49%, according to sources. 

They mentioned that while the cutoff was tight, it matched the bank’s expectations, showing a positive market outlook. The total order book for the bonds was around ₹6,000 crore, indicating strong investor demand for these instruments.

Sources stated that this bond issuance followed the US Federal Reserve’s decision to cut its policy rate by 50 basis points, which helped lower yields.

About 76 investors, including banks and insurance companies, submitted bids for the bonds, sources said. The funds raised by the Mumbai-based Bank of India will strengthen its capital adequacy, adding about 40 basis points to its capital adequacy ratio, which will now be around 16%. As of June 30, the bank’s capital adequacy was at 15.60%.

The bank also plans to raise ₹2,500 crore through additional tier-I bonds in the quarter ending December. In addition, it plans to raise ₹5,000 crore via infrastructure bonds. In July, the bank raised ₹5,000 crore through 10-year infrastructure bonds at a coupon rate of 7.54%.

The coupon rate for Bank of India’s tier-II bond offering on Wednesday was lower than the 7.80% rate at which the bank raised funds through similar bonds previously, sources said. Last year, the bank raised ₹2,000 crore in tier-II bonds at a 7.80% coupon rate, with ₹1,500 crore used to replace maturing bonds and ₹500 crore to boost capital.

Earlier this month, the State Bank of India raised ₹7,500 crore at a coupon rate of 7.33% through its second Basel III-compliant tier-II bond issuance for this fiscal year. So far in FY25, SBI has raised ₹15,000 crore through Basel III-compliant tier-II bonds.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

We're Live on WhatsApp! Join our channel for market insights & updates

Enjoy Zero Brokerage on Equity Delivery
4.4 Cr+DOWNLOADS
Enjoy Zero Brokerage on Equity Delivery

Get the link to download the App

Send App Link
Get it on Google PlayDownload on the App Store
Open Free Demat Account!
Enjoy ₹0 Account Opening Charges