IDFC First Bank raises ₹1500 crore with tier-2 bonds

IDFC First Bank surges 2% after Rs 479.5-Cr block deal with GQG Partners

IDFC First Bank Raises ₹1,500 Crore through Tier-2 Bonds

IDFC First Bank, one of India’s prominent private lenders, recently announced its successful raising of ₹1,500 crore through tier-2 bonds in the Indian bond market. The bank revealed this development to the Indian stock market exchanges, highlighting that the privately placed bonds are unsecured, subordinated, and listed on the NSE E-bidding platform. These bonds, issued as fully paid-up, taxable, non-convertible debentures, comply with Basel III regulations and hold a face value of ₹1 crore each.

The news of this capital infusion caught the attention of stock market enthusiasts during Tuesday’s trading sessions. As a result, IDFC First Bank’s share price experienced a positive gap at the opening and quickly surged to an intraday high of ₹79.60 per share on the NSE. This rapid increase represented an intraday gain of nearly 2.50% within minutes of the stock market’s commencement.

IDFC First Bank proudly disclosed the impressive ratings of the tier-2 bonds, with CRISIL Ratings Limited assigning them a rating of CRISIL AA+/Stable and India Ratings & Research Private Limited assigning them IND AA+/Stable. It is noteworthy that the bank’s tier-2 bond ratings were recently upgraded in June 2023 by CRISIL Ratings Limited, moving from CRISIL AA/Positive to CRISIL AA+/Stable.

The participation in the bond issuance primarily came from domestic Qualified Institutional Investors. The NSE e-bidding platform witnessed substantial interest from corporations, public pension funds, provident funds, and insurance companies, resulting in oversubscription of the issue. The tenor of the unsecured tier-2 bonds is set at 10 years, with a call option available at the end of five years. These bonds carry a coupon rate of 8.40%.

With the successful capital raise, IDFC First Bank’s capital adequacy, as calculated based on its financials as of March 31, 2023, is expected to reach 17.68%. This enhanced capital position provides the bank with greater flexibility and potential for future growth.

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In the fiscal year 2022-2023, IDFC First Bank reported a Profit After Tax (PAT) of ₹2,437 crore (equivalent to US$301 million) and maintained a strong capital adequacy ratio of 16.82%. The bank boasts high asset quality, with retail loans exhibiting a Gross Non-Performing Asset (NPA) ratio of 1.65% and a Net NPA ratio of 0.55% as of March 31, 2023. The overall Gross NPA, including infrastructure loans, stands at 2.51%, with a Net NPA of 0.86%.

By securing ₹1,500 crore through tier-2 bonds, IDFC First Bank positions itself strategically for future growth and ensures its continued financial stability in the Indian banking sector.

About IDFC First Bank:

IDFC First Bank is a privately-owned Indian bank that was created through the merger of the banking division of Infrastructure Development Finance Company and Capital First, a non-bank financial institution based in India.

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