Bank of India to raise Rs 2,500 crore via perpetual bonds

Bank of India (BOI) is raising Rs 2,500 crore via perpetual bonds. The primary issue size is Rs 1,250 crore, with a greenshoe option (to have an additional size of an equal amount). The tenure of the bonds is 10 years, with a call option at the end of the 10th year. The coupon rate of these bonds has been set at 11 per cent. These are Basel-III compliant bonds.The issue arrangers are ICICI Bank, Axis Bank, Darashaw, and Trust Capital. Issue is expected to remain open till August 8, 2014

Perpetual bonds do not offer fixed maturity but the issuer can call back the issue after 10 years. Basel III is a global capital standard for banks. Tier-I perpetual bonds are considered relatively riskier as these are unsecured investments. The securities may be converted to equity if a specific capital requirement falls below 5.5%.

The bank's Basel-III capital adequacy ratio stood at 9.97% as on March 31, 2014. Bank of India has 4545 branches in India. In addition BOI has overseas presence in 22 foreign countries.

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