Bonds (AT 1 bonds)

Why in news?

Yes Bank will move to the Supreme Court against the order of the Bombay High Court

to write off the additional tier – 1 bonds of up to 8,300 crore.

About

AT 1 bonds, also called perpetual bonds, carry no maturity date but have a call option.

The issuer of such bonds may call or redeem the bonds if it is getting money at a cheaper rate, especially when interest rates are falling.

They are like any other bonds issued by banks and companies but pay a slightly higher rate of interest compared to other bonds.

AT – 1 bonds are regulated by the Reserve Bank of India (RBI).

These bonds are also listed and traded on the exchanges. So, if an AT – 1 bondholder needs money, he can sell it in the secondary market.

Investors cannot return these bonds to the issuing bank and get the money.