The Bank of India is preparing to issue Basel-III Tier-II bonds on September 13th in an effort to raise Rs 2,000 crore. These bonds have a tenure of 10 years and include a call option after 5 years. They have received ‘AA+’ and ‘Positive’ ratings from CRISIL and Acuite Ratings & Research respectively. The funds raised will be used to support regular business activities, with provisions in place for penalties related to listing delays and default situations. IDBI Trusteeship Services Ltd and Bigshare Services have been enlisted to provide trustee and registrar services respectively.
According to money market sources, the Bank of India is preparing to issue Basel-III Tier-II bonds on September 13th in an effort to raise up to Rs 2,000 crore. These bonds will have a maturity of 10 years or 120 months. The bank plans for a base issue size of Rs 1,000 crore with an option to retain oversubscription up to Rs 1,000 crore, as outlined in the term sheet of the issue.
According to a source familiar with the matter, the bank is set to raise up to Rs 2,000 crore through bonds on September 13. These bonds will also have a call option of five years.
The bond bidding will occur on September 13, from 10 AM to 12 PM, through the electronic bidding platform of the National Stock Exchange of India. The pay-in date and deemed date of allotment are set for September 15.
Both CRISIL Ratings and Acuite Ratings & Research have given bonds a rating of ‘AA+’ with a ‘Stable’ outlook and a ‘Positive’ outlook respectively.
The state-owned lender plans to use the funds from the issue for its regular business activities, as stated in the issuer manual of the bank. It’s important to note that these funds are not intended for financing any specific project.
The bonds can be called within five years or on September 15, 2028, and every year after that, subject to Tax Call/ Regulatory Call. If the bank chooses to exercise the call option, the bond will be redeemed on that specific day. Additionally, the bonds are intended to be listed on the wholesale debt segment of the National Stock Exchange of India Limited (NSE).
According to the bank, the issuer is required to submit an application to the NSE for listing the bonds and obtain permission within three business days from the closing of the issue. This information was mentioned in the term sheet.
Default specifics
Additionally, if there is a delay in listing the debt securities beyond the mentioned period, the issuer will be required to pay a penalty interest of at least 1 percent per year above the coupon rate. This penalty would be applicable from the date when the allotment is considered until the listings of those debt securities occur.
In the event of a default (including delay) in paying the interest or principal amount by the due date, the bank requires the issuer to pay an additional interest rate of 2 percent per year above the coupon rate for that period.
To address this matter, the state-owned lender has enlisted IDBI Trusteeship Services Ltd as the debenture trustee for the issue, and Bigshare Services as the registrar.
According to NSE-EBP data, Axis Finance raised Rs 150 crore through bonds that will mature on December 11, 2026. Similarly, LIC Housing Finance raised Rs 500 crore through bonds that will mature on May 19, 2026.
