SBI Raised Rs 4,000 Cr via AT1 Bonds
This is the lowest pricing ever offered on such debt issued by any bank since the country started implementing the stringent Basel II capital rules in 2013, said the country's largest lender in regulatory filings at stock exchanges on Thursday.
State Bank of India (SBI) has sold Rs 4,000 crore of the Basel compliant additional tier one (AT1) bonds at a coupon of 7.74 per cent.
This is the lowest pricing ever offered on such debt issued by any bank since the country started implementing the stringent Basel II capital rules in 2013, said the country’s largest lender in regulatory filings at stock exchanges on Thursday.
As the aggregate bids were in excess of Rs 6,000 crore, the bank exercised the full green shoe option of Rs 3,000 crore over and above the base issue size of Rs 1,000 crore.
While SBI has AAA credit rating from local credit agencies, its AT1 offering is rated AA-plus which is the highest rating in the country for these instruments in view of the hybrid and high-risk nature of these instruments.
While the AT1 instrument is perpetual in nature, it can be called back by the lender after five years or any anniversary date thereafter.
This issuance comes after a successful issue of tier twp bonds last month by SBl aggregating to Rs 8,931 crore at 6.8 per cent which is again the best ever pricing for tier two debt instruments. Both the issuances were solely managed by SBI Capital Markets Ltd.
“The overwhelming success of this issuance reaffirms SBI’s paper as gold standard and showcases the investor interest for such quality papers,” said Deputy Managing Director for Finance J Swaminathan.
He said the apprehensions that prevailed in the market after the Yes Bank AT1 write-down in March have been firmly put behind.
“The interest payout on such bonds is better than the cost of equity for the banks and it provides a good risk-adjusted return to the investors. Hence it offers a win-win situation for both the banks and the investors,” said Swaminathan.
SBI is the largest commercial bank in terms of assets, deposits, branches, customers, and employees. It is also the largest mortgage lender in the country with a deposit base of over Rs 34 lakh crore.