InvestorQ : Why is Bank of Baroda planning to raise funds via the perpetual bond route?
Debbie Mascarenhas made post

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

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Crowny Pinto answered.
3 months ago
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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.

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