The board of directors of Chennai-based public sector lender, Indian Overseas Bank (IOB), has given a nod to raise R800 crore by way of Tier-1 perpetual bonds in one or more tranches.The perpetual bond is a debt with no maturity date. Since it does not have to be repaid, it is considered a source of Tier-1 capital. For banks, perpetual bonds help fulfill the bank?s capital reserve requirements.
M Narendra, chairman and managing director, IOB, told FE, ?this is an enabling resolution which gives us right to raise money as and when the market condition is conducive. We have to work out certain things, like coupon rate, before launching the bonds issue. We have to take a call on whether to go in for one go or in tranches. This, plus the expected government infusion of funds together, the bank?s capital adequacy position will be at a very comfortable level?.
IOB had recently concluded its $1-billion medium term-note fund raising programme. As part of it, the bank had raised $ 500 million as second and final tranche by way of senior unsecured bonds on August 13 through the bank?s Hong Kong branch. The notes issued were listed on Singapore Stock Exchange and the same will mature on February 21, 2018. The bonds have been issued at the coupon rate of 4.625% per annum.
The first tranche of $500 million bonds were raised in Arpil 2011, through the its Hong Kong branch. The notes were issued on April 19, and listed on Singapore Stock Exchange.
The bonds, which have been raised at the coupon rate of 5% are to mature on October 19, 2016.
