SBI raises ₹4,691 cr through bonds from diversified qualified institutions

State Bank of India (SBI), the country’s largest lender, has raised ₹4,691 crore through its first Basel III compliant Additional Tier 1 (AT1) bonds to part fund the growth strategy, signifying its ability to diversify and raise long term non-equity regulatory capital,.

This is the first Tier I bonds issuance in the ongoing financial year and the paper carries a coupon rate of 7.75%. The tenor of these bonds is perpetual with call option after five years and each anniversary date thereafter and are rated AA+ with “stable” outlook from CRISIL Ratings Ltd and CARE Ratings Ltd.

“This issue attracted a robust response from investors with bids of more than two times against the base issue size of ₹ 3,000 crores,” SBI said in a statement.

“The total number of bids received was 89 indicating participation from diverse set of qualified institutional bidders. The investors were across provident funds, pension funds, mutual funds, banks etc,” it added.

C.S. Setty, Chairman, SBI said that wider participation and heterogeneity of bids demonstrated the trust investors place in the country’s largest bank.

Under the Basel-III norms, AT1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the Reserve Bank of IndiaI. AT-1 bonds, which qualify as core or equity capital, are one of the means of raising capital by public sector banks to meet global norms on capital adequacy (Basel III).