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Home / Markets / Stock Markets /  Axis raises $600 mn from AT-1 bond issue

MUMBAI : Private sector lender Axis Bank Ltd has launched an offshore additional tier 1 (AT1) bond offering to raise as much as $1 billion, according to deal terms seen by Mint.

Axis Bank will use the proceeds for green and social projects. The bank has set an initial price guidance of 4.4% for the bonds. HSBC, BNP Paribas, BofA Securities, Citigroup, J.P. Morgan, Standard Chartered Bank are managing the bond offering.

Axis Bank is the second Indian lender this year to tap overseas debt markets to raise funds through AT1 bonds. HDFC Bank recently raised $1 billion.

AT1 bonds, also called perpetual bonds, carry no maturity date but have a call option. The issuer of such bonds may call or redeem the bonds if it is getting money at a cheaper rate, especially when interest rates are falling.

The interest in tapping the offshore bond markets comes after widespread losses to individual investors who invested in Yes Bank’s AT1 bonds, which prompted the Securities and Exchange Board of India to introduce stricter investment rules for local sales of such instruments, leading to a drying out of such offerings.

State Bank of India (SBI) was the first lender to raise capital through offshore AT1 bonds in 2016. In June 2021, India’s largest lender said it will raise AT1 capital by issuing Basel III compliant debt instruments in dollar or rupee through a public offer or private placement to overseas and/or Indian investors this fiscal.

Many companies have been tapping the offshore debt markets to raise money to take advantage of low interest rates in developed markets and diversify their sources of funding. SBI, UltraTech Cement, Adani Green Energy, Shriram Transport Finance, and Adani Electricity Mumbai have raised capital through offshore bonds in 2021.

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