In a significant financial move, the State Bank of India (SBI) is gearing up to raise a substantial amount of up to Rs 10,000 crore (approximately $1.20 billion) by issuing Basel III-compliant tier-II bonds with a 15-year maturity period. This promising development was revealed by three esteemed merchant bankers on Thursday, shedding light on SBI’s strategic financial plans.
According to these financial experts, SBI is preparing to open the doors for coupon and commitment bids for this bond issue in the upcoming week. Investors and financial stakeholders are eagerly anticipating this opportunity to engage with the country’s largest lender.
An interesting aspect of this bond offering is that it will include a call option at the conclusion of the tenth year, adding a layer of flexibility and attractiveness to potential investors. However, as of now, SBI has not provided an official response to a request for comment from Reuters, keeping the financial community on its toes.
To further enhance the appeal of these bonds, they have been assigned a top-tier rating of AAA by respected consulting and rating firms, CRISIL and India Ratings. This stamp of approval reflects the strong creditworthiness and reliability associated with SBI’s financial instruments.
This isn’t the first time SBI has opted for such a financial strategy. In September 2022, the bank successfully raised 40 billion rupees through tier-II bonds with a 15-year maturity, offering an attractive coupon rate of 7.57 percent. Additionally, in the same month, SBI managed to secure 100 billion rupees through infrastructure bonds also maturing in 15 years, with a coupon rate of 7.49 percent, demonstrating a history of financial prowess and investor confidence.
The State Bank of India (SBI) stands as India’s largest commercial bank, founded on July 1, 1955, with its headquarters located in Mumbai. Operating as a public-sector bank and a financial service statutory body, SBI boasts a substantial market share, catering to a customer base of over 48 crore individuals, accounting for a quarter of the market.
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