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BUZZ-India's weak banks at risk of AT1 coupon defaults - ICRA
October 3, 2017 / 11:24 AM / 2 months ago

BUZZ-India's weak banks at risk of AT1 coupon defaults - ICRA

** Risk of weak state-run banks skipping coupon payments for additional Tier I (AT1) bonds increasing - ratings agency ICRA

** Risk rises as RBI is unlikely to further help weaker banks by easing regulations to help them meet AT1 coupon payments

** “The coupon servicing by weaker PSBs (public sector banks) continues to be characterised by high risk,” ICRA said in a release

** AT1 have become popular among state-run lenders, and are riskier than regular debt since buyers would typically absorb losses first, before senior creditors

** RBI, govt have previously stepped in to tweak regulations on AT1 or with fund injections in cases when issuers were at risk of missing coupon payments

** ICRA calls on govt to inject more capital into state-run banks over the next two years, saying failure to do so could lead to missed coupon payments on AT1 issuance ($1 = 65.5400 Indian rupees)

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