Bank of India Locks In Capital at 7.28% as PSU Bond Supply Tightens

has raised ₹2,500 crore via 10-year Basel III-compliant Tier II bonds at a coupon of 7.28%, using a ₹1,000 crore base issue and a ₹1,500 crore greenshoe option fully taken up. The issue drew strong demand, with bids nearing ₹5,000 crore, allowing the bank to close at a relatively tight level despite recent upward pressure on bond yields.​ The bonds carry a call option at the end of year five and annually thereafter, giving the lender flexibility to refinance if the rate cycle turns more benign. Proceeds will augment regulatory capital and support general business growth rather than any earmarked project, bolstering the bank’s ability to expand its loan book while staying comfortably above minimum capital thresholds.​ The pricing, roughly 60–70 bps over similar-tenor government securities, reflects both the sovereign-backed PSU profile and still-elevated term premiums in the current environment. Alongside recent successful issues by peers such as HUDCO and ICICI Bank, the transaction underscores that higher-quality issuers continue to access long-tenor money at competitive levels even as weaker names and some PSUs defer planned fundraises. Source: The Economic Times No Recommendations