State-owned Union Bank of India has raised Rs 850 crore by issuing Basel-III-compliant bonds on a private placement basis.

Regulatory filing read as

“we had allotted Basel-III-compliant tier-II bonds, which are in the nature of debentures eligible for inclusion in tier-II capital, aggregating to Rs 850 crore.”

Maturity and coupon rate

The tenor of the bond is 10 years and it has a coupon rate of 7.19 per cent per annum.

There will be a call option on the bonds which can be applicable on or after the fifth year from the date of allotment (June 24, 2021).

What is call option on bonds?

A call option bond provides the issuer of the bond to repay the debt before the maturity, especially when the interest rates are falling as servicing a debt at a higher rate is not prudent.

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