Bank of Baroda to raise Rs2,500 crore via bond issue

22 December 2007

Mumbai: Public sector Bank of Baroda will raise around Rs2,500 crore in the next few months to fulfil new capital requirements, reports quoting bank officials said.

BoB has filed documents with the stock exchanges to raise $500 crore in perpetual bonds, $1,500 crore in upper-tier 2 debt and Rs500 crore in lower-tier 2 bonds.

BOB Capital Markets, the merchant banking arm and a wholly owned subsidiary of the bank, is the sole banker to the issue.

CRISIL has assigned AAA/Stable rating to BoB's Rs500 crore perpetual tier I bonds and Rs1,500 crore upper-tier II bonds and Rs 500 crore lower-tier II bonds.

The rating agency has also reaffirmed AAA/Stable on the bank's Rs20,000 crore lower-tier II bonds, Rs1,000 crore lower-tier II bonds, Rs600 crore lower-tier II bonds.

CRISIL's ratings of BoB's debt instruments continue to reflect the bank's strong market position, healthy resource profile, comfortable capitalisation, sustained improvement in asset quality, and expected support from the government. These rating strengths are partially offset by the bank's average earnings profile.