Bank of India has successfully mobilised ₹2,500 crore through the issuance of 10-year Tier-2 bonds, with a cut-off yield fixed at 7.28%, according to a Moneycontrol report. The total issuance includes a ₹1,500 crore greenshoe option, giving the bank flexibility to enhance the size based on investor demand. The bonds carry a call option after five years and annually thereafter, providing the bank the option to redeem earlier if required. The pay-in and allotment for the bonds are scheduled for December 12, 2025.
Bidding Dynamics and Investor Response
Investor participation in the issuance was concentrated around narrow yield points. At 7.27%, bids aggregated to ₹2,280 crore, while at 7.28% the total bids amounted to ₹2,655 crore. Further, bids at 7.29% and 7.30% reached ₹3,055 crore and ₹3,562 crore respectively. The highest demand appeared at 7.31%, with bids totaling ₹3,882 crore. Based on overall demand and subscription levels, the final cut-off yield for the bonds was determined at 7.28%.
Concurrent Market Activity
The same day, Housing and Urban Development Corporation (Hudco) raised ₹1,905 crore through seven-year bonds priced at 6.98%, falling short of its ₹2,500 crore target. The market witnessed limited competing issuances following the withdrawal of planned offerings worth ₹11,500 crore by PFC and SIDBI, which redirected investor funds toward active deals like Bank of India’s Tier-2 bonds.
Recent Trends in Bank Fundraising
Banks have increasingly turned to the debt markets for capital mobilisation in recent months after a subdued start to the financial year. State Bank of India raised ₹7,500 crore in October via Tier-2 bonds at 6.93%, while ICICI Bank issued ₹3,945 crore in November through 15-year Tier-2 bonds at 7.40%, supplementing its earlier ₹1,000 crore June issuance at 7.45%. November also saw Canara Bank raise ₹3,500 crore via AT-1 bonds at 7.55%, marking its first such issuance in nearly a year, and Axis Bank raise ₹5,000 crore through a 10-year infrastructure bond at 7.27%.
Strategic Significance
This Tier-2 bond issuance strengthens Bank of India’s capital base, supporting regulatory capital requirements and future lending capacity. The success of the issue reflects robust investor appetite for long-term bank instruments amid a steady interest rate environment.
Summary:
Bank of India raised ₹2,500 crore via 10-year Tier-2 bonds at a 7.28% cut-off yield, including a ₹1,500 crore greenshoe option, with a call option after five years. Investor demand was strong across narrow yield bands. The bonds enhance the bank’s capital base and come amid broader bank fundraising activity, including Hudco, SBI, ICICI Bank, Canara Bank, and Axis Bank.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.