CREDIT SUISSE FAILURE UNLIKELY TO SPOOK AT1 BOND INVESTORS IN INDIA

PNB may issue ₹2,000 cr worth of such bonds this week; yields may not surge

- BHASKAR DUTTA

The write-down of $17 billion worth of contingent convertible bonds of fore risks surrounding Indian additional tier-1 (AT1) bonds, which are instruments of a similar nature.

Analysts said following regulatory changes taken after the YES Bank fiasco in 2020, the domestic landscape for AT-1 bonds has significantly improved. As such, the latest episode surrounding Credit Suisse is unlikely to have a substantial impact on domestic AT1 bond issuances by banks.

In the first such bond sale following the Credit Suisse episode, state-owned lender Punjab National Bank is set to issue AT1 bonds worth ₹2,000 crore on Friday, sources said.

Treasury officials expect the coupon for PNB's bonds to be set around 8.50 per cent, not much above the 8.25 per cent set for SBI's last AT1 bond sale on March 8.

Considering the fragile sentiment currently prevailing in the global banking sector, the expected rate of interest for PNB's AT1 upcoming issuance suggests that domestic investors for these securities are not too concerned.