Bank of Maharashtra Raises Rs 290 Cr By Issuing AT1 Bonds

Public sector lender Bank of Maharashtra (BoM) on Thursday said it has raised Rs 290 crore by issuing Basel III compliant bonds. The bank issued Basel III compliant additional tier 1 (AT1) bonds of Rs 290 crore, including green shoe option of Rs 40 crore, on Wednesday at a coupon rate of 8.75 per cent, the lender said in a statement.

"The issue garnered overwhelming response from investors with bids of Rs 1,055 crore received against a base issue size of Rs 250 crore, which is an indicator of the trust the investors place on the bank," BoM said. The Pune-based lender said the Rs 290 crore capital raised through the AT1 bonds will support business growth of the bank. The AT1 instrument is perpetual in nature with call option after five years, said the lender.

Perpetual bonds carry no maturity date, so they may be treated as equity, not as debt. The bank has credit ratings of AA (Stable) for AT1 bonds from Acuite and Infomerics rating agencies. To comply with Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. Indian banking system has been implementing Basel III standards in phases since April 1, 2013. PTI