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SBI raises Rs 3717cr from its third AT1 bond sale

State Bank of India (SBI) has raised Rs 3,717 crore through its third Basel III compliant Additional Tier 1 bond issuance in the current financial year at coupon rate of 8.25 per cent.

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More About this Development:

SBI said the issue attracted overwhelming response from investors with bids of Rs 4,537 crore and was oversubscribed by about 2.27 times against the base issue of Rs 2,000 crore. The total number of bids were 53 indicating wider participation. The investors were across provident and pension funds and insurance companies.

This issuance is also very significant as SBI has been able to successively diversify and raise long term Additional Tier 1 capital with a call option after 10 years and this will help the bank in managing its capital adequacy effectively.

Significance of This move:

The country’s largest lender says that the proceeds of bonds will be utilised in augmenting Additional Tier 1 Capital and overall capital base of the Bank and for strengthening capital adequacy in accordance with RBI Guidelines. The tenor of these bonds is perpetual with a call option after 10 years and every anniversary thereafter.

SBI’s Earlier Experience:

Prior to this, the Bank had raised Additional Tier 1 Bonds of Rs 4,544 crore on 21st February 2023 at a spread of 71 bps over the corresponding FBIL G-Sec par curve on the date of bidding.

SBI said of the total outstanding of Bank’s Additional Tier 1 Bonds is Rs 49,842.70 crore, Basel III AT1 bonds with call option of 5 years is Rs 41,581.70 crore and AT1 bonds with call option of 10 years is Rs 8,261 crore.

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