PNB To Raise Rs 800 Cr In AT1 Bond, Instrument Has 'AA+' From India Ratings
Public sector lender Punjab National Bank is planning to raise up to Rs 800 crore through tier-1 bonds (AT 1 bonds), in order to shore up its capital base for business growth.
The Delhi-based lender has board approvals in place to raise Rs 12,000 crore in capital in FY23 through bond issuances (Rs 5,500 crore of additional Tier-1 bonds and Rs 6,500 crore of Tier-II bonds). Of this, PNB has already raised Rs 3,240 crore of AT-1 bonds and Rs 4,000 crore of Tier-II bonds in 9MFY23.
India Ratings has assigned "AA+" rating to the proposed offering. The rating factors in PNB’s demonstrated equity-raising ability and the likelihood of an improvement in its pre-provisioning operating profitability in FY23. This is expected to help the bank maintain and possibly grow its market share in advances and deposits, the agency said.
Tier-1 bonds are non-convertible, perpetual, unsecured, and Basel III-compliant. The coupon payments are annual and non-cumulative and the bank has full discretion at all times to cancel them.
PNB is well-capitalised, with a common equity tier-1 (CET-1) ratio of 10.84 per cent in 3QFY23 and a capital adequacy ratio (CAR) of 15.15 per cent at end of December 2022, India Ratings said.
Commercial banks have raised sizeable amounts through AT1 and tier-II bonds. They have raised about Rs 34,659 crore through the AT1 bonds till date in Fy23, up from Rs 29,684 crore in all of FY22, according to data collated by JM Financial Services group.
The scale of capital raising by banks through Tier II bonds has been much higher with issuances amounting to Rs 57,386 crore till date in FY23, up from Rs 16,319 crore in FY22, JM Finance data showed.
Last week, rating agency Crisil assigned “AA+” rating to HDFC Bank’s proposed AT1 bond offering of Rs 3,000 crore. The bank has healthy capitalisation, underpinned by a sizeable net worth of Rs 2.67 trillion and an overall CAR of 17.66 per cent as on December 31, 2022. Crisil Ratings has taken note of the composite scheme of amalgamation of HDFC and HDFC Bank, announced by both companies on April 4, 2022.
Titi Coles Legacy In Finance: Pioneering Diversity And Leadership
Titi Cole, one of the most senior Black women in the world of finance, recently exited her high-profile role at Citi. He... Read more
Rising Rates, Rising Challenges: Bankers Adapt To Serve Troubled Companies In A Changing Economic Landscape
As interest rates climb, troubled companies are facing heightened financial pressures, prompting them to seek assistance... Read more
The Elusive Nature Of Fraud Detection: Exploring The Auditor's Dilemma
In the intricate world of financial reporting, auditors serve as guardians of integrity, tasked with uncovering discrepa... Read more
The Battle For Depositors: US Lenders Ramp Up Efforts Amidst Rate Uncertainty
In the competitive landscape of the US banking sector, retaining depositors is paramount for lenders seeking to maintain... Read more
Beyond Capital: Unveiling The Complexities Of Bank Failure Prediction
In the realm of banking, the ability to predict and prevent failures is paramount for financial stability and consumer c... Read more
Central Banks And The Economic Horizon: Steering Through Uncertaintie
In the evolving landscape of global financial markets, the strategic role of central banks has come under intense scruti... Read more