Canara Bank Issues 10-Year Tier-II Bonds To Raise ₹5,000 Crore

Canara Bank has raised ₹5,000 crore by issuing Basel III-compliant Tier-II bonds with a 10-year maturity. The bonds are holding a coupon rate of 7.24%.

The base issue size was ₹2,000 crore, but the bank exercised the greenshoe option to retain additional demand and raise the full ₹5,000 crore.

How Strong Was Investor Demand For The Bond Issue?

The lender received five bids aggregating ₹1,970 crore at a 7.20% coupon.

It also received two bids, each aggregating ₹2,970 crore, ₹3,610 crore, and ₹4,430 crore, at coupon rates of 7.21%, 7.22%, and 7.23%, respectively.

Bids at the 7.24% level alone totalled over ₹5,350 crore, while additional bids at 7.25% brought the total to ₹5,403 crore. Ultimately, the bank chose to accept bids at 7.24% and raised funds up to the upper limit of ₹5,000 crore.

The bonds carry a call option at the end of the fifth year and annually thereafter. They have been assigned an ‘AAA’ rating with a Stable outlook by ICRA and India Ratings.

How Did The Stock Performance?

Shares of Canara Bank on 26 February 2026 closed marginally higher at ₹158.90 on the BSE, gaining around 0.05%, while the broader benchmark index dipped slightly.

Also Read - Market Breadth Improves In February As Advance-Decline Ratio Crosses 1

What Does This Mean For Investors?

The high price at which the bond issue is being subscribed shows the creditworthiness and financial strength of the bank. Even with several bid levels, the bank was in a position to issue the funds at a competitive coupon of 7.24. This indicates a high-level of institutional investor demand and further consolidates the bank in the debt market.

Also, the additional Tier II capital enhances the bank’s capital adequacy ratio and acts as a buffer to support loan growth and absorb potential stress.

But the actual effect will be determined by the effectiveness with which the funds are employed to increase incremental earnings and enhance return ratios. Also, a stronger capital base improves resilience, but sustained stock performance will hinge on profitability, asset-quality trends, and credit-growth momentum.

Sources:

Economic Times

The Hindu