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The state-run bank has invited coupon and commitment bids from bankers and investors on Wednesday, they said.
The main risk in investing in such bonds is that only the issuer has the discretion to redeem them early.
As per SEBI’s new rules, AT-1 or perpetual bonds need to be now valued at Yield to Maturity (YTM), from earlier practice of Yield to Call date, when the company is expected to buy back the bond and return money.
The 100-year rule will be effective in two years and such bonds will be valued as 10-year papers for now.
The finance ministry has stepped in worried over SEBI’s move that may impact on PSU banks’ ability to raise capital.
The 100-year maturity rule can create volatility in NAVs of mutual fund schemes exposed to such bonds, say sources.
Public sector Central Bank of India will go for a premature buyback of 9.4 percent perpetual bonds worth Rs 500 crore.
"The Bank has raised non-convertible, unsecured subordinated fully paid-up Basel III compliant perpetual debt instruments eligible for inclusion in additional tier-I (AT 1) capital of Rs 750 crore through private placement," it said in a regulatory filing.
Debabrata Sarkar, CMD of Union Bank of India said they are looking to raise perpetual bonds worth Rs 1500 crore. Taking into consideration the Basel III committee recommendations, a mix of tier II bonds along with perpetual bonds may help them raise capital in the December quarter itself
Tata Steel Friday said it has raised Rs 1,500 crore through perpetual bonds.
Tata Steel, the world's seventh-largest steelmaker, plans to sell Rs 1,500 crore (USD 332 million) of perpetual bonds, two sources with direct knowledge said, marking the first ever issuance of hybrid corporate bonds in India.
