In the domestic Indian bond markets, IDFC FIRST Bank stated on Tuesday that it has raised ₹ 1,500 crore in tier-2 bonds.
These privately placed bonds have a face value of ₹1 crore apiece and were obtained through private placement on the NSE e-bidding platform. They are unsecured, subordinated, rated, listed, nonconvertible, fully paid-up, taxable, redeemable Basel III compliant tier-2 bonds (in nature of debentures).
The bonds have ratings of IND AA+/Stable and CRISIL AA+/Stable from India Ratings & Research and CRISIL Ratings, respectively. The tier-2 bond ratings of IDFC FIRST Bank were recently raised by CRISIL Ratings to CRISIL AA+/Stable from CRISIL AA/Positive.
Domestic institutional investors who met certain qualifications took part in the issuance. Corporates, public pension funds, provident funds, and insurance firms all showed strong interest in the NSE e-bidding platform, and the issuance as a whole was oversubscribed.
The 10.2-year, 8.40%-coupon unsecured tier-2 Bonds were issued with a call option after five years and had a tenor of 10 years. By include this capital raising, IDFC FIRST Bank’s capital adequacy as of March 2023 financials would be 17.68%, which should give the bank more flexibility to grow.
The company’s shares on NSE ended the day on Tuesday trading down 0.32% at ₹ 78. The stock has increased by around 28% so far this year.
The shares of the bank have ranked among the best on Wall Street over the past year. The stock was recently downgraded to underperform by brokerage CLSA after a spectacular gain of roughly 143%. The firm, which had previously given the company a “buy” recommendation, has updated the target price to ₹ 85. The valuations were very inflated because of the recent run.
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