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Debbie Mascarenhas made post

Why is Bank of Baroda planning to raise funds via the perpetual bond route?

Answer
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Crowny Pinto answered.
1 week ago


Bank of Baroda raised Rs.981 crore by issuing unsecured rated subordinated non-convertible Basel III additional tier-1 perpetual bonds. These bonds carried a coupon rate of 8.5% and were spread across 18 allottees on a private placement basis. As the name suggests, these perpetual bonds carry no maturity date and hence are treated as equity.

This is an effort to shore up Tier-1 capital to comply with Basel III regulations. Most of the PSU banks are aggressively raising funds for Tier 1 and Tier 2 capital to allay fears of potential stress on asset quality. This capital also provides a cushion to banks to expand their asset books.