IDFC FIRST Bank boosts capital adequacy with successful Tier-2 bonds issuance

IDFC FIRST Bank announced today the successful raising of Rs 1,500 crores through the issuance of Tier-2 bonds in the domestic Indian Bond markets.

These bonds, privately placed on the NSE e-bidding platform, represent a significant move by the bank to bolster its capital base and enhance its ability to fuel future growth.

The bonds were issued as unsecured, subordinated, non-convertible, fully paid-up, taxable, and redeemable, and they comply with Basel III requirements. Each bond has a face value of Rs. 1 crore. The bonds carry a rating of CRISIL AA+/ Stable from CRISIL Ratings Limited and IND AA+/Stable by India Ratings & Research Private Limited, underscoring their sound investment quality. Notably, IDFC FIRST Bank‘s Tier-2 bond ratings received an upgrade to CRISIL AA+/Stable from CRISIL AA/Positive by CRISIL Ratings Limited in June 2023.

Interest in the issuance was robust, attracting domestic Qualified Institutional Investors. Notably, the bidding on the NSE e-bidding platform saw a strong appetite from Corporates, Public Pension Funds, Provident funds, and insurance companies, leading to an oversubscription of the offering. The Tier-2 Bonds, with a tenor of 10 years and a call option at the end of five years, were raised at a coupon rate of 8.40%.

Following this successful capital raise, IDFC FIRST Bank’s capital adequacy, based on its financials as of March 31, 2023, stands at 17.68%. This figure indicates a stronger position for the bank to accommodate future growth.