Canara Bank Successfully Raises Rs 5,000 Crore Through Tier-II Bond Sale

On Thursday, state-owned Canara Bank successfully raised Rs 5,000 crore through the issuance of Tier-II bonds, which are compliant with Basel III standards. The bonds, offering a coupon rate of 7.24%, will mature in 10 years, according to market sources.

The initial base issue was set at Rs 2,000 crore, but the bank utilized the greenshoe option to raise the remaining funds. Five bids amounting to Rs 1,970 crore were submitted at a 7.20% coupon rate. Additionally, two bids each were received for cumulative amounts of Rs 2,970 crore, Rs 3,610 crore, and Rs 4,430 crore at coupon rates of 7.21%, 7.22%, and 7.23%, respectively.

The bids reached Rs 5,350 crore at a 7.24% rate and two more bids totaling Rs 5,403 crore at 7.25%. The decision was taken to accept the Rs 5,000 crore proposal at a 7.24% coupon. The bonds, rated 'AAA' with a 'Stable' outlook by ICRA and India Ratings, feature a call option after five years. Following the announcement, Canara Bank's stock rose slightly, closing 0.06% higher at Rs 158.75 on the BSE.