Canara Bank to raise Rs 4,500 crore via AT-1 bonds next week

Canara Bank has announced plans to raise up to Rs 4,500 crore through Basel III-compliant Additional Tier-1 (AT-1) bonds in the coming week, according to reports. The bonds are expected to carry a coupon rate between 7.85% and 7.90%. This issuance represents a significant component of the bank's capital management strategy and follows regulatory requirements for maintaining adequate capital buffers. The offering is structured as part of Canara Bank's comprehensive Rs 8,500 crore capital-raising plan for the current fiscal year, the announcement indicated.

Following this AT-1 bond issuance, the bank plans to raise additional capital through Tier 2 bonds later in the fiscal year to complete its capital plan. This phased approach to capital raising allows the bank to manage its debt obligations and market conditions systematically.

AT-1 bonds represent an important capital instrument for Indian banks, offering investors relatively higher yields while providing banks with a permanent capital base that absorbs losses before equity holders. The planned issuance reflects Canara Bank's efforts to strengthen its balance sheet and maintain regulatory compliance under Basel III norms. For fixed-income investors, the 7.85%-7.90% coupon range represents the bank's assessment of market conditions and investor demand for banking sector debt instruments. The broader Rs 8,500 crore capital plan demonstrates the bank's commitment to building financial resilience and supporting its growth objectives while adhering to central bank capital adequacy requirements.

Source: Markets-Economic Times