Axis Bank Ltd. postponed a US$500 million bond issuance amid concerns among foreign investors about the health of Indian banks after the discovery of a US$2 billion fraud at Punjab National Bank, Mint reported, citing "two people aware of the development."
The bank's decision to defer the issuance came after investors raised concerns about the overall health of banks in India, said one of the sources. Some investors have sought details regarding any contingent liability from the Punjab National Bank fraud.
Axis Bank was planning to issue 5.5-year senior unsecured notes with a coupon of 3.25%. It has yet to decide on a new date for the issuance. The bank is working on addressing the concerns and plans to launch the issue in the next few weeks, said another source.
An Axis Bank spokesman refused to comment on market speculation.
The discovery of the fraud at state-run Punjab National Bank has reverberated throughout the country's banking industry. In its disclosures, Punjab National Bank identified Axis Bank's Hong Kong branch as one of the branches that had received fraudulent letters of undertaking against which it had released payments.
Axis Bank, however, clarified that it had sold down all the buyers' credit transactions undertaken by its Hong Kong branch with Punjab National Bank.
