Key Points Bond Issuance:
- State Bank of India (SBI) successfully raised Rs. 3,717 crores through its third Basel III compliant Additional Tier 1 bond issuance.
- The bonds were issued at a coupon rate of 8.25% and the funds raised will be used to augment the Bank’s Additional Tier 1 Capital and overall capital base, in accordance with RBI Guidelines.
- The tenor of the bonds is perpetual, with a call option available after 10 years and every anniversary thereafter.
- The issue received an overwhelming response from investors, with bids of Rs. 4,537 crores, oversubscribing the base issue of Rs. 2,000 crores by 2.27 times.
- The recent successful issuance of SBI’s third Basel III compliant Additional Tier 1 bonds is a significant achievement for the bank and is expected to encourage banks to develop a long-term Additional Tier 1 bond curve and effectively manage their Additional Tier 1 capital.
- SBI has AA+ credit rating with a stable outlook from domestic credit rating agencies for these instruments, and currently, the bank’s outstanding Additional Tier 1 Bonds stand at Rs. 49,842.70 crores.
Details of Bond Issuance:
SBI Raises Rs. 3,717 Crores through Basel III Compliant Bonds
State Bank of India (SBI), the country’s largest lender, successfully raised Rs. 3,717 crores through its third Basel III compliant Additional Tier 1 bond issuance on Wednesday. The bonds were issued at a coupon rate of 8.25 per cent, and the funds raised will be used to augment the Bank’s Additional Tier 1 Capital and overall capital base, in accordance with RBI Guidelines. The tenor of the bonds is perpetual, with a call option available after 10 years and every anniversary thereafter. The issue received an overwhelming response from investors, with bids of Rs. 4,537 crores, oversubscribing the base issue of Rs. 2,000 crores by 2.27 times. This wider participation saw a total of 53 bids from investors across provident & pension funds & insurance companies.
SBI to Accept Rs. 3,717 Crores at 8.25% Coupon Rate
After receiving an overwhelming response from investors, State Bank of India (SBI) has decided to accept Rs. 3,717 crores from its third Basel III compliant Additional Tier 1 bond issuance. The bonds were issued at a coupon rate of 8.25% payable annually, representing a spread of 66 bps over the corresponding FBIL G-Sec par curve on 8th March 2023. This successful issuance follows the Bank’s previous Additional Tier 1 bond offering of Rs. 4,544 crores on 21st February 2023, at a spread of 71 bps over the corresponding FBIL G-Sec par curve. The Bank has AA+ credit rating with a stable outlook from domestic credit rating agencies for these instruments.
SBI’s Successful Issuance to Diversify Long Term Capital
The recent successful issuance of State Bank of India’s (SBI) third Basel III compliant Additional Tier 1 bonds is a significant achievement for the bank. With a call option after 10 years, this long-term capital will help SBI manage its capital adequacy effectively. Currently, the bank’s outstanding Additional Tier 1 Bonds stand at Rs. 49,842.70 crores, of which Basel III AT1 bonds with call option of 5 years is Rs. 41,581.70 crores, and AT1 bonds with call option of 10 years is Rs. 8,261 crores. This successful issuance is expected to encourage banks to develop a long-term Additional Tier 1 bond curve and effectively manage their Additional Tier 1 capital.
About SBI:
State Bank of India is a Fortune 500 company. It is an Indian Multinational, Public Sector banking and financial services statutory body headquartered in Mumbai. It is the largest and oldest bank in India with over 200 years of history.
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