Source: Reuters
Context: Canara Bank issued India’s first Additional Tier I perpetual bonds since recent rule changes, attracting strong investor interest with a lower-than-expected coupon of 8.27%.
- This marks a revival in demand for these bonds, which had declined due to regulatory challenges.
- The Securities and Exchange Board of India’s (SEBI) recent valuation tweak, allowing mutual funds to value these bonds based on the call option, has made them more attractive.
A perpetual bond is a type of debt security that does not have a fixed maturity date. Unlike traditional bonds that have a set date when the principal amount is repaid, perpetual bonds continue to pay interest indefinitely.
