Axis Bank and IndusInd Bank aim to raise Rs 4,000 crore

MUMBAI: Axis Bank is planning to use a window ahead of the RBI’s monetary policy next month to raise around Rs 4,000 crore in perpetual bonds and infrastructure bonds, indicating a reversal of the ultra-loose policy. Maybe, said three people familiar with the matter.

Axis Bank aims to raise around Rs 2,000 crore through Additional Tier 1 (AT1) or permanent papers locally, after attracting foreign investors. Those papers are expected to yield 7.9-8.1 per cent. This fund will strengthen its capital base. The bank’s capital adequacy ratio stood at 20.04 per cent in the September quarter.

It reported a net profit of Rs 3,133 crore, up 86 per cent year-on-year.

A senior official of a financial institution said on the condition of anonymity, “The bank is trying to raise cheaper money before it becomes costlier following the December RBI policy.”

Axis Bank raised $600 million through the sale of sustainability-focused AT1 bonds. Dollar-denominated, Basel III-compliant AT1 notes were priced at 4.1 percent, 0.3 percent below initial price guidance.

Both Axis Bank and IndusInd Bank did not respond to ET’s emailed queries.

IndusInd Bank has reached out to certain market participants with a proposal for sale of infrastructure bonds. India’s largest private sector bank by asset size, ICICI Bank on Wednesday sold the second series of infrastructure bonds, offering 6.67 per cent with a maturity of seven years.

IndusInd Bank grew its loan book by 10 per cent year-on-year to around Rs 2.21 lakh crore, reflecting demand for loans. In the previous June quarter, debt had grown by only 6 per cent.

“This will further enhance our overall capital adequacy levels. We expect stable credit growth and asset quality conditions in the near future, IndusInd Bank Managing Director Sumant Kathpalia said in an analyst call on September quarter earnings.

Long-term investors, including insurance companies and pension funds, have an appetite for owning infra bonds, but lenders are seeing a revival in infrastructure credit. In September, HDFC Bank followed the same path and raised Rs 5,000 crore by offering 6.44 per cent.

The problem for infrastructure bonds is secondary market liquidity. This in turn keeps short term investors like mutual funds away from it. Large corporate treasuries also subscribe to them.


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