The IDBI bank after facing a downward rating managed to pay Rs 166.3 crore as interest removing doubts of its investors about its ability to pay.
“Issuers of perpetual bonds would be able to raise money at a relatively lower cost,” said Ashish Agarwal, executive director at AK Capital. “IDBI Bank’s interest payment has clearly added investor confidence. They were earlier apprehensive of a default, which would have dented the market sentiment.”
“State-owned banks are going through certain asset quality pain but is unlikely to miss interest payments with sovereign support,” he said.
“For dedicated debt market investors, perpetual bonds throws an opportunity to earn extra interest income,” said Ajay Manglunia, executive vice-president at Edelweiss Finance. “With IDBI Bank meeting repayment schedule, it will encourage domestic institutional and wealthy investors, who were earlier doubtful. It has certainly eased concerns over its risk factors.”