At1 Bonds

A Bloomberg index of contingent convertible bonds has risen 10 per cent from the lows seen during the Credit Suisse crisis

The issuance of tier II as well as Tier I bonds was marked by increase in the coupon on instruments reflecting hardening of interest rates and tight liquidity

It would raise capital by issuing AT-1 bonds upto Rs 7,000 crore and tier- II Bonds up to Rs 5,000 crore, in one or more tranches

If top court rules in favour of bondholders, Yes Bank shares could see a selloff as its capital base gets eroded, impeding its growth prospects; other banks, especially PSBs, may be impacted too

Hardening yields drives decision to raise lower amounts; Bond market sources said coupon was firmed up at 8.75%

Deutsche Bank's AT1 bonds have tumbled in value after Switzerland wiped out Credit Suisse's securities in the deal for it to be taken over by UBS

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During FY23, HDFC Bank was the only private sector lender that raised capital using AT1 bonds

Big money managers such as Pacific Investment Management Co. and Invesco Ltd. are among the largest holders, owning around $807 million and $370 million, respectively

It is important to note that AT1 bonds are unsecured, perpetual bonds that banks issue to improve their core capital base

The wipeout of $17 billion worth of AT1 bonds in the UBS-Credit Suisse deal has spooked investors as they now assess if this can happen to their AT1 holdings in other banks as well

The bond wipe out is the biggest loss yet for Europe's $275 billion AT1 market, far eclipsing the only other write-down to date of this type of security

The nation's largest lender State Bank of India on Wednesday raised Rs 3,717 crore through additional tier 1 bond sale. The bank said this is the third Basel III compliant additional tier 1 (AT1) bond sale and the latest issue was closed at a coupon rate of 8.25 per cent. The proceeds will be used to augment its additional tier 1 capital and overall capital base of the bank and also for strengthening capital adequacy in accordance with RBI guidelines. These perpetual bonds have a call option after 10 years and every anniversary thereafter. On the investor interest, the bank said the issue attracted an overwhelming response from investors with bids of Rs 4,537 crore from 53 bids from provident and pension funds and insurance companies and was oversubscribed by about 2.27 times against the base issue of Rs 2,000 crore. Given the high response, the bank has decided to accept Rs 3,717 crore at a coupon rate of 8.25 per cent payable annually. This represents spread of 66 bps over the

AT-1 coupon rates rise as inflation, US bond selloff sour view on bonds

The Supreme Court on Friday issued notices to Axis Trustee Services Ltd on a batch of appeals filed by the Reserve Bank of India (RBI) and others challenging a Bombay High Court order quashing a decision of the Yes Bank Administrator to write off Additional Tier 1 (AT-1) bonds. The top court also extended the stay on the operation of the Bombay High Court order quashing the decision of the Yes Bank Administrator to write off AT-1 bond worth Rs 8,415 crore as part of the bailout in March 2020. A bench headed by Chief Justice D Y Chandrachud, however, assured the AT-1 bond investors that it would try to find out some kind of solution to the financial trouble being faced by them after senior advocate Mukul Rohatgi, appearing for Axis Trustee Services Ltd, said the invested money has become zero for no fault of theirs. It was the top officials of the bank who brought down the bank. Their men are in jail. Our money has become zero... we are not Tata-Birla. We are institutional investors.

Bonds allocated at coupon of 8.2% with call option on Feb 2033

On January 20, the Bombay High Court had quashed YES Bank's decision to write off AT-1 bonds in March 2020

The bonds, which are likely to receive a rating of AA+, may go up for bidding on February 20 with issuance scheduled for the next day

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The final order is yet to be uploaded on the court website and the bank can choose to appeal in Supreme Court