Ratings agency Crisil on Thursday assigned AA+ rating to Andhra Bank’s R1,000-crore long-term infrastructure bonds, making it the first issuance to be rated.
“Crisil has assigned its ‘CRISIL AA+/Stable’ rating to the R10-billion infrastructure bond issue of Andhra Bank. Crisil has also reaffirmed its ratings on the bank’s Tier-I Perpetual Bonds and Upper Tier-II Bonds at ‘CRISIL AA/Stable’. The ratings continue to factor in the strong support that Andhra Bank will receive from the Government of India, and the bank’s adequate capitalisation,” it said in a note.
The Reserve Bank of India on July 15 issued guidelines for the issuances of long-term bonds (with minimum maturity of seven years) for financing infrastructure projects and for affordable housing by scheduled commercial banks. These bonds will be exempt from cash and statutory reserve requirements.
Other private sector banks too have announced similar bonds. The country’s largest private sector bank, ICICI Bank, is looking to raise R1000 crore via infrastructure bonds. “We just made an announcement two days ago. It’s an issuance of R500 crore with a green shoe option on R500 crore and it is open currently. I think infra bonds for us are going to be important in the funding structure because we have been large players in financing infrastructure projects and housing loans which qualify for this,” said Chanda Kochhar, MD and CEO of the bank.
YES Bank also announced that it is looking to raise R3,000 crore via infrastructure bonds during the course of the year. Axis Bank too
had said that it was looking to raise money through infra bonds but was yet to flesh out the details.
Among public sector lenders, Bank of Maharashtra had said that it was looking to raise money through infra bonds over the next six months. “We hope to build up ourinfrastructure portfolio and go for infra bonds soon… maybe earlier than six months,” Bank of Maharashtra CMD S Muhnot told media persons earlier this month. Muhnot said the funds raised would help the bank increase its exposure to the infra sector to about 17% of its loan portfolio by this fiscal-end from the current 14%.