Perpetual bonds – where do we go from here? × Markets will get more clarity over next few months as some AT-1 bonds approach the call date It has been over a month since SEBI announced guidelines for perpetual bonds and almost a month since the valuation of such bonds under the new methodology has been implemented. Before we get into implications of such valuation, lets quickly understand what these bonds are, and how did they actually impact market sentiment. AT-1 (additional tier 1) bonds are issued predominantly by banks to raise additional Tier 1 capital without any maturity date (perpetual), but they have a call option. Banks issue AT-1 bonds to meet their capital adequacy requirement. Higher capital adequacy norms came into force with the implementation of Basel III guidelines.