Perpetual Bonds

India's Bank of Baroda plans to raise at least 5 billion rupees ($62.52 million) through sale of Basel III compliant additional Tier I perpetual bonds, say three merchant bankers

The recent semi-public exchanges between Sebi and DFS raise several questions about the legislative function of regulators that need careful consideration

Here's a selection of Business Standard opinion pieces for the day

AT1 bonds may lose sheen but Sebi takes the right call

Easing of valuation rule for perpetual bonds by Sebi will provide a breather to the mutual fund industry

Capital market regulator Sebi has eased valuation rule pertaining to perpetual bonds

Implementation of 100-year valuation norm pushed to April 2023

Here is look at outstanding AT1 bonds of select banks and amount for call option in due in FY22

Yields of perpetual bonds issued by State Bank of India and Bank of Baroda, for instance, have gone up by as much as 80-90 basis points (bps), and top recommendation lists of most managers

Sebi is not wrong in expressing a desire to draw an empirical bright line for an outer limit, in order to be able to compute yields, and thereby value the bonds

Here's a selection of Business Standard opinion pieces for the day

Sebi's new rules around mutual fund (MF) investments in these bonds have kicked up a storm

A sudden change in the metrics will be disruptive

Revised norms to treat all perpetual bonds as 100-year tenor to be withdrawn

Market participants say ask yields for other large-sized banks' AT-1 bonds have hardened further

Overall, more than Rs 8,000 crore of investments are exposed to YES Bank's AT-1 bonds

State Bank of India's bonds see 130 basis points jump in yields since Friday

According to the data sourced from primemfdatabase.com, MFs' exposure to the AT-1 bonds - also called perpetual bonds - stood at Rs 37,687 crore as of January 31, 2020

This amount will be in addition to existing securities of $750 million (around Rs 5,343 crore) that the company has raised recently

The coupon rate on perpetual bonds is attractive, but they come with a call option, and are not for investors who want liquidity