The bank raised $500 million through an Additional Tier 1 (AT1) perpetual issue and another $300 million through a senior five-year bond in transactions which closed on Tuesday.
“The bank could raise an order book of more than $2.2 billion out of which $900 million was for the senior debt and the rest was for the AT1 bond. Investors were mostly from Asia since this was a Regulation S transaction, not open to investors in the US. Among the investors in these bonds were the US based BlackRock and London headquartered Ninety One Asset Management,” said a person aware of the transaction.
Axis Bank successfully raised $800 million through a dual tranche dollar bond, tapping into the Reserve Bank of India’s concessional swap facility. The bank secured $500 million via an Additional Tier 1 perpetual issue and $300 million from a five-year senior bond. Both issuances attracted significant investor interest, closing within initial price guidance and highlighting the bank’s strong position in international markets.
Both the bonds closed inside their initial price guidance. While the five year bond was finally priced at 110 basis points above the five year US security, after the initial price guidance of 130 above the five year, the AT1 bond was priced at 6.87%, lower than the 7.12% initial guidance issued by the bank.
Also Read | Banking, capital goods and midcaps seen driving market’s next rally: Ashish Chaturmohta
Live Events
With the five year US treasury trading at around 4.27%, the Axis Bank five year bond is likely to be priced at a yield of 5.37%.
“The AT1 bond will probably replace the perpetual bonds issued by the bank five years ago which are callable in September this year. Both these bonds are eligible for the 1.5% fixed-rate swap provided by the RBI for raising external commercial borrowings which does not distinguish between dollar funds raised from abroad,” said a second person aware of the development.Axis Bank did not reply to an email seeking comment. Spokespersons at HSBC and MUFG, which were among the bankers to the issue declined comment. Spokespersons at Barclays, BNP Paribas and Citibank did not reply to an email seeking comment.