State Bank Of India

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 on March 08, 2023 at coupon rate of 8.25%. The proceeds of bonds will be utilized 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. 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 & pension funds & insurance companies.

Based on the response, the Bank has decided to accept Rs 3,717 crore at a coupon rate of 8.25% payable annually. This represents spread of 66 bps over the corresponding FBIL G-Sec par curve on March 08, 2023. Prior to this, the Bank had raised Additional Tier 1 Bonds of Rs 4,544 crore on February 21, 2023 at a spread of 71 bps over the corresponding FBIL G-Sec par curve on the date of bidding. The Bank has ‘AA+’ with stable outlook credit rating from domestic credit rating agencies for these instruments.

This issuance is also very significant as the Bank 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. 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.

SBI is the country’s largest lender and it offers a wide range of services in the Personal Banking, Agriculture/ Rural, NRI services, SME and Corporate Banking etc.