SBI Raises ₹5,000 Crore via AT-1 Bonds at 7.98%

On Wednesday, State Bank of India (SBI) successfully raised ₹5,000 crore through the issuance of Additional Tier-I (AT-I) bonds, marking its first issuance for the current financial year. The bonds, which carry a coupon rate of 7.98%, are aimed at strengthening the bank’s capital base and comply with Basel-III norms.

This issuance comes after SBI’s last AT-I bond issuance in January, where it raised ₹5,000 crore at a higher coupon rate of 8.34%. The market response has been robust, with bids exceeding 3.5 times the base size of ₹2,000 crore, indicating strong investor confidence in the bank.

Details of the Issuance

Coupon Rate and Structure: The bonds are priced at a coupon rate of 7.98%, with a call option available after 10 years.

Investor Response: The issuance attracted significant interest, receiving 108 bids, including participation from provident funds, insurance companies, and mutual funds.

Market Context

Comparative Rates: The current coupon rate is lower than the previous issuance in January, reflecting a decline in government bond yields by over 30 basis points since April.

Capital Adequacy: As of June 30, 2024, SBI’s capital adequacy ratio stood at 13.86%, down 70 basis points year-on-year, highlighting the need for capital-boosting measures.

Future Plans

SBI has also raised ₹15,000 crore through Tier-II bonds this financial year to support its deposit base amidst credit growth. Meanwhile, Indian Bank is preparing to raise up to ₹5,000 crore through infrastructure bonds, indicating a broader trend of capital-raising efforts in the banking sector.