AT-1 bonds worth Rs37,600 crore may be prematurely recalled by banks, including those under PCA and those likely to fall under that framework, rating agency Icra said. AT-1 bonds worth Rs37,600 crore may be prematurely recalled by banks, including those under PCA and those likely to fall under that framework, rating agency Icra said in a note on Tuesday. Issued under Basel-III capital norms, AT-1 bonds, also known as perpetual bonds, are sold by banks with an option to recall, usually at the end of fifth year. According to bond dealers, investors have bought AT-1 bonds at a premium taking into consideration sovereign support. Banks have the prerogative to skip coupon payments for AT-1 bonds in case they don’t have enough profits or distributable reserves.

Source: Mint February 27, 2018 23:15 UTC