 "BoI to raise Rs 1,500 cr capital through Basel III bonds")
Public sector lender Bank of India plans to raise upto Rs 1,500 crore through Basel III compliant bonds to boost its tier II capital for business growth.
Rating agency CRISIL has assigned ‘AAA/Stable’ rating to Tier II bonds issue. These bonds carry a feature called “Point of non-viability (PONV)” trigger. Occurrence of such event results in loss of principal amount to investors and default on the instrument.
While PONV trigger will be determined by Reserve Bank of India, the possibility of trigger is remote in the Indian context due to the robust regulatory and supervisory framework.
CRISIL has also reaffirmed its ratings on the bank’s existing debt instruments at ‘CRISIL AAA/Stable/CRISIL A1+’.
The ratings continue to reflect expectation of strong support from the Government of India (GoI), the bank’s majority shareholder, both on an ongoing basis and in the event of any distress.
BoI’ is adequately capitalized with comfortable resource profile, and established market position. These rating strengths are partially offset by BoI’s average asset quality and earnings profile, CRISIL said.
BoI’s capitalisation is adequate (under Basel II norms), with Tier I of 7.84% and overall CAR of 10.36%, as on June 30, 2013.
Rating agency CRISIL has assigned ‘AAA/Stable’ rating to Tier II bonds issue. These bonds carry a feature called “Point of non-viability (PONV)” trigger. Occurrence of such event results in loss of principal amount to investors and default on the instrument.
While PONV trigger will be determined by Reserve Bank of India, the possibility of trigger is remote in the Indian context due to the robust regulatory and supervisory framework.
Also Read
The rating assigned to bonds issued under Basel III norms factors in the risk associated with the PONV feature.
CRISIL has also reaffirmed its ratings on the bank’s existing debt instruments at ‘CRISIL AAA/Stable/CRISIL A1+’.
The ratings continue to reflect expectation of strong support from the Government of India (GoI), the bank’s majority shareholder, both on an ongoing basis and in the event of any distress.
BoI’ is adequately capitalized with comfortable resource profile, and established market position. These rating strengths are partially offset by BoI’s average asset quality and earnings profile, CRISIL said.
BoI’s capitalisation is adequate (under Basel II norms), with Tier I of 7.84% and overall CAR of 10.36%, as on June 30, 2013.