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SBI mops up Rs 3,717 crore from issuing additional bonds

The State Bank of India (SBI) had earlier planned to raise Rs 7000 through Additional Tier-1 bonds

March 09, 2023 / 06:07 AM IST
A State Bank of India ATM in Mumbai (File photo)

A State Bank of India ATM in Mumbai (File photo)

The country’s largest lender, State Bank of India (SBI) has raised Rs 3717 crore at a coupon rate of 8.25 percent through Additional Tier 1 (AT-1) bond issuance.

The tenor of these bonds is perpetual with a call option after 10 years and every anniversary thereafter, the lender said in a press release.

The issue attracted investors with bids of Rs 4,537 crore, the lender said, and was oversubscribed by about 2.27 times against the base issue of Rs 2,000 crore.

Also read: Eyeing a bigger share: SBI Capital, SPA Capital emerge as leading arrangers in the municipal bonds market since 2013

AT-1 bonds are a type of perpetual debt instrument that banks use to augment their core equity base and thus comply with Basel III norms. These bonds were introduced by the Basel accord after the global financial crisis to protect depositors.

“We believe that this issuance may help in developing a long-term AT-1 bond curve and encourage banks to effectively manage their AT-1 capital,” the lender said in a release.

Last year, Moneycontrol reported that big lenders alongside SBI are planning to collectively raise up to Rs 10,000 crore through sales of perpetual bonds. SBI planned to raise up to Rs 7,000 crore for which it is in talks with the Life Insurance Corporations of India (LIC) and the Unit Trust of India (UTI).

Moneycontrol News
first published: Mar 8, 2023 08:33 pm