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Regional India Bank Recalls Perpetual Debt Amid Bad Loan Woe

  • Bank of Maharashra is the first lender to call back AT1 bonds
  • The move aimed at repaying expensive bonds, boost risk buffer
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One of India’s biggest regional lenders is recalling 15 billion rupees ($231 million) of perpetual bonds as it seeks to retire expensive debt and replenish its risk buffers.

Mumbai-based Bank of Maharashtra will call back the notes on March 17, ahead of their call dates in 2020 and 2021, a person familiar with the matter said. The two securities carry a coupon of 9.48 percent and 11.6 percent, respectively, data compiled by Bloomberg show. Any shortfall in capital could partly be bridged by the government’s plan to infuse 32 billion rupees into Bank of Maharashtra as part of an 881 billion rupee injection into state-run banks.