SBI raises Rs 3,717 crore through issuance of Additional Tier 1 bonds

State Bank of India announced on Wednesday that it raised Rs 3,717 crore through the issuance of its third Basel III Additional Tier 1 bonds in the current financial year at a coupon rate of 8.25 per cent.

The proceeds of the bonds will be utilised in augmenting Additional Tier 1 Capital and overall capital base of the lender and in strengthening capital adequacy. These perpetual bonds have a call option after 10 years and every anniversary thereafter.

SBI stated that the issue witnessed overwhelming response from investors with bids of Rs 4,537 crore and was oversubscribed 2.27 times against the base issue of Rs 2,000 crore. It saw investors across provident and pension funds and insurance companies.

“Based on the response, the bank has decided to accept Rs. 3717 crores at a coupon rate of 8.25% payable annually. This represents a spread of 66 bps over the corresponding FBIL G-Sec par curve on 8^th March 2023,” the lender said in a statement.

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

The bank has AA+ with a stable outlook credit rating from domestic agencies for these instruments.

The issuance will help the bank in managing its capital adequacy effectively. Of the total outstanding of Additional Tier 1 bonds of 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.

Shares of the country's largest lender traded lower in Thursday's trade. The stock fell 0.48 per cent to trade at Rs 561.80 in early deals today.

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