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March 5, 2024

Axis Bank Initiates Infrastructure Bond Route for Fundraising After Two-Year Gap: Sources

ndia’s Axis Bank is gearing up to enter the infrastructure bond market for the first time in over two years, according to reports from two bankers on Monday. The move signals the bank’s intention to raise funds through long-term financing avenues.

Sources revealed that the private lender aims to raise approximately 40 billion rupees ($482.70 million) through the issuance of 10-year bonds. Bidding for the bond issue is expected to commence before the end of the current week, as confirmed by one of the bankers familiar with the matter.

While Axis Bank has yet to make an official announcement regarding the bond sale, the anticipated move marks a significant development in its fundraising strategy.

Infrastructure bonds serve as a means to secure financing for extensive development projects with long-term objectives. Axis Bank’s foray into this market segment follows the recent fundraising efforts of other prominent banks like Kotak Mahindra Bank and Bank of Baroda, who successfully raised funds through infrastructure bonds earlier this quarter.

The decision to tap into the infrastructure bond market comes amidst a notable surge in fundraising activities within the banking sector, particularly among commercial banks. In the current financial year, excluding financial institutions, banks have collectively raised over 544 billion rupees through infrastructure bond issuances. This figure represents a substantial increase compared to the 296 billion rupees raised in the previous fiscal year.

Axis Bank’s previous engagements in infrastructure bonds include a fundraising of 26 billion rupees through bonds maturing in 10 years in December 2021. Additionally, in December 2022, the bank successfully raised 120 billion rupees by issuing Basel III-compliant Tier-II bonds with a 10-year maturity period, offering a coupon rate of 7.88 per cent.

As Axis Bank prepares to re-enter the infrastructure bond market, industry analysts anticipate heightened investor interest and a positive response to the bank’s fundraising initiative. The move reflects the bank’s strategic approach to diversifying its fundraising channels and accessing long-term capital to support its growth objectives in the evolving financial landscape.

Rajan Shukla

Rajan Shukla

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