Axis Bank raises Indian’s first Sustainable USD AT1 notes of $ 600 million.
First USD AT1 bond ever by an Indian issuer in a Sustainable format.
Axis Bank, India’s third largest private sector bank has successfully priced its US $ 600 million issuance of Sustainable Additional Tier 1 (AT1) notes in the overseas markets on September 1, 2021. The dollar- denominated, Basel III - compliant AT1 notes were finally priced at 4.10 per cent, 30 bps lower than the initial price guidance, marking it a highly successful return for Axis Bank to the international bond markets after a 4 years hiatus.
With this issuance, India is now only the second jurisdiction in Asia with an ESG AT1 issuance. The offering witnessed an overwhelming response from the investors, especially high- quality real money investors, with the order book being 3.8 times oversubscribed ahead of the Final Pricing Guidance announcement. The order book was also very well diversified across geographies (Asia 58%, Europe 20%, US 16%, Middle East 6%) and high- quality funds, insurers and sovereign wealth funds making up 83% of the allocations, reflected Axis Bank’s strong credit fundamentals. Equally important, 47% of the bonds were allocated to sustainability- focused investors. Global investors, with their participation in this marquee transaction have shown confidence in the Bank's ability to make a difference in the social and environmental landscape of India. Environment, Social and Governance is pivotal to Axis Bank, which is further demonstrated by its setting up a Board level ESG Committee and a strong Sustainable Financing Framework. The Bank’s Framework is graded as 'Credible & Impactful' by Second Party Opinion provider – Sustainalytics. To read more about the ‘Sustainable Financing Framework’, pls visit: https://www.axisbank.com/docs/default-source/default-document-library/axis-bank-sustainable-financing-framework.pdf
The issuance has been given a rating of B1 by Moody’s Rating Services and the pricing was not only the tightest pricing achieved for a USD AT1 transaction with an issue rating in this category, but was also significantly tighter than some of the higher- rated perps from Developed Markets and Emerging Markets. The said AT1 notes will be listed on SGX-ST, ISM, INDIA INX IFSC and NSE IFSC.
"This successful transaction, which is also the largest single-tranche USD bond issuance ever for Axis Bank, reflects the faith and confidence that international investors have reposed in the Bank's franchise and robust credit and business model. The Bank is committed to maintaining its strong fundamentals and focus on sustainability. We believe that this transaction will be crucial in showcasing India's growth story to the world at large”, said Mr. Neeraj Gambhir, Group Executive & Head, Treasury, Markets & Wholesale Banking Products, Axis Bank.
The bonds were sold to qualified institutional buyers in reliance on Rule 144A and outside the United States in offshore transactions in reliance on Regulation S. The bonds have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The closing of the bonds is subject to customary closing conditions.