In FY22, most of the funds raised through the instrument were to refinance the bond issue done in FY17, ikra ratings said in the report on Monday.
Most bonds have a call option in the fifth year, resulting in a significant surge in new issuances that are basically to refinance earlier obligations.
In FY17, there were Rs 32,100 crore for public sector banks and Rs 10,900 crore for private sector lenders. In FY18, the amounts stood at Rs 10,900 crore and Rs 23,500 crore, respectively.
According to the report, lenders have already refinanced FY18 bonds due to lower interest rates in FY22.
Lenders have already raised Rs 5,320 crore from the instrument in the first four months FY23,
The AT-1 bond outstanding as on July 31 stood at Rs 1.02 lakh crore and is expected to reach Rs 1.1 lakh crore by March 31, 2023, as new offers and redemptions netted between April and July 2022, the report said. .
Rating Agency Vice President Anil Gupta The said new issuances of Rs 20,100 crore would be from state-owned lenders to meet their growth aspirations, while private sector banks would be “modest” based on market opportunities.
On the demand side, driven by the better financial position of public sector banks, investors are now keen to bet on AT-1 bonds.
The yield on recently issued AT-1 bonds by public sector banks ranges from 8 to 8.75 per cent, while on five-year government bonds is 7.25 per cent and on five-year AAA corporate bonds, 7.55 per cent, the report said. PTI AA Ram