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AT1 bonds make a comeback with Rs 18,000 cr issuances this year, more banks likely to join

With attractive yields, banks are looking to quickly raise capital through the instrument. Experts see issuances topping Rs 30,000 crore this fiscal as investors get more confident in banks' financial health

September 12, 2022 / 03:56 PM IST
Representative Image

Representative Image

AT1 bonds, or additional tier-1 bonds, are back with a bang in the Indian banking industry after being pushed to the back burner two years back when a Yes Bank write-off of such bonds caused massive losses to investors.

At least five banks Moneycontrol spoke to said they are likely to tap AT1 bonds in a bigger way in the coming days to shore up the capital base as credit demand picks up and system liquidity tightens further.

This comes after more than Rs 18,000 crore worth of AT1 bond sales in this financial year, with recent back-to-back issues from State Bank of India, Bank of Baroda, HDFC Bank and Bank of Maharashtra.

AT1 bonds had faced a trust-deficit following Yes Bank's write down of Rs 8,415 crore bonds in 2020. But the market has revived since then, a Moneycontrol analysis showed.