InvestorQ : Why is Canara Bank planning to raise funds via AT1 bonds?
Aditi Sharma made post

Why is Canara Bank planning to raise funds via AT1 bonds?

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Mahima Roy answered.
5 months ago
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Canara Bank plans to raise Rs.3,400 crore via the issue of fresh Additional Tier-I bonds or AT1 bonds. The purpose of these bonds is to redeem the maturing bonds and use the funds to grow the loan book. A chunk of this will go towards redeeming Rs.2,500 crore of bonds maturing in this fiscal. India ratings has assigned a AA/stable rating to the proposed AT1 bonds of Canara Bank. Additionally, Canara will also raise equity of Rs.2,500 crore.

In May 2021, the board of Canara Bank had approved plans to raise up to Rs.9,000 crore in FY22. Canara only requires total infusion of Rs.5,000 crore in FY22 and FY23 to maintain its capital adequacy. So, its funds are intended to boost the asset book aggressively to coincide with the economic recovery. After the merger of Syndicate Bank into Canara Bank, its total share of net advances has gone up to 6.3% as have the deposits.

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