IDFC First Bank targets Rs 3,000 Cr debt capital via tier II bonds

IDFC First Bank targets Rs 3,000 Cr debt capital via tier II bonds

IDFC First Bank Aims to Generate Rs 3000 Cr Debt Capital Via Tier II Bonds

IDFC First Bank, a prominent private sector lender, recently garnered Rs 3,000 crore in equity capital and is now setting its sights on securing a similar sum through debt capital, specifically Tier II bonds. This strategic move is intended to fuel the bank’s continued expansion and development.

IDFC First Bank Enhancing Financial Strength

In response to inquiries from Business Standard, IDFC First Bank revealed that it has recently acquired an additional rating of Rs 3,000 crore from CRISIL for its Tier II bonds. While this rating serves as a preparatory step for future Tier-II capital raising endeavors, the bank has not yet finalized immediate plans in this regard due to its already robust capital adequacy position.

CRISIL, the renowned rating agency, has conferred an “AA+/Stable” rating upon the proposed Tier II Basel III compliant bond offering. This rating reaffirms the bank’s solid financial footing across various debt instruments.

IDFC First Bank Strong Ratings

The bank’s impressive ratings can be attributed to its substantial capitalization level. This reflects a consistent expansion of its operations, bolstered by the strengthening of both its retail asset and liability portfolio. Improved asset quality, coupled with expectations of sustained growth in operating and overall profitability, were also cited by CRISIL as contributing factors.

IDFC First Bank Previous Financial Endeavors

In June 2023, the Mumbai-based private bank successfully raised Rs 1,500 crore by issuing Tier II bonds with a 10-year tenor and a callable option after five years. These bonds offered an attractive coupon rate of 8.4 percent.

Additionally, IDFC First Bank recently raised Rs 3,000 crore in equity capital from institutional investors through a Qualified Institutional Placement (QIP). This involved the issuance of 330.40 million equity shares, each with a face value of Rs 10, at a price of Rs 90.25 per share, inclusive of a premium of Rs 80.25 per equity share. The QIP subscription period opened on October 3, 2023, and concluded on October 6, 2023, as per the BSE filing.

Following this capital infusion, the bank’s standalone capital adequacy ratio, as of June 30, 2023, is poised to reach an impressive 18.56 percent, as highlighted in the bank’s official statement.

IDFC First Bank Prominent Investors

Key participants in the QIP offering included Aditya Birla Sun Life Insurance, Bajaj Allianz Life Insurance, ICICI Prudential Life Insurance, and Morgan Stanley Asia, according to the BSE filing.

IDFC First Bank Solid Financial Position

IDFC First Bank boasts robust capitalization, evident in its overall capital adequacy ratio (CAR) of 16.96 percent, with a Tier I capital adequacy ratio of 13.70 percent as of June 30, 2023. The bank’s total assets reached Rs 1,71,578 crore, with retail-funded assets accounting for Rs 1,18,071 crore as of the same date, underscoring its substantial financial strength.

About IDFC First Bank:

IDFC First Bank emerged through the merger of Infrastructure Development Finance Company’s banking division and Capital First, a prominent Indian non-bank financial institution.

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