IDBI Bank is planning to raise capital worth Rs 5,000 crore through senior, upper and lower Tier II bonds in 2009-10 to shore up its capital adequacy ratio for supporting business growth.
Rating agency Fitch has assigned a rating of ‘AA+(ind)’ to IDBI Bank’s Rs 4,000 crore senior and lower Tier-II subordinated bonds and ‘AA-(ind)’ rating to Rs 1,000 crore upper Tier-II subordinated bonds, which are to be issued in the domestic market.
According to Fitch, the lower rating for the upper Tier-II bonds reflects the loss absorption role of hybrid instruments through their junior status and the in-built deferral clauses. “The upper Tier-II subordinated bonds carry a coupon and principal deferral clause if the capital adequacy ratio of the bank is below the regulatory minimum (currently 9 per cent). In the event of a net loss during the year, the coupon payment is subject to regulatory approval. The coupon is cumulative in case of a deferral. The bonds have a minimum tenure of 15 years and may carry a call and coupon step-up clause after 10 years,” a release said.
As on December 31, 2008, the capital adequacy of the bank stood at 113.78 per cent.
In the same period, total business was Rs 1,72,995 crore, 38 per cent higher than Rs 1,25,332 crore reported in the year-ago period.
This included a 42 per cent rise in deposits to Rs 80,803 crore from Rs 56,889 crore and 35 per cent growth in advances to Rs 92,192 crore as compared to Rs 68,443 crore as on December 31, 2007.
