SBI raise Rs 4,000 crore via AT1 bonds

Shares of State Bank of India (SBI) jumped over 3% Thursday after India’s largest lender raised Rs 4,000 crore via AT1 bonds.
The state owned lender sold Rs 4,000 crore of the Basel compliant Additional Tier 1 (AT1) bonds at a coupon of 7.74%.

This is the lowest pricing ever offered on such debt, issued by any lender since the country started implementing the stringent Basel ll capital rules in 2013.
As the aggregate bids were in excess of Rs 6,000 crore, the bank exercised the full greenshoe option of Rs 3,000 crore over and above the base issue size of Rs 1,000 crore.

These bonds have AAA credit rating from local credit agencies and its AT1 offering is rated AA+, which is the highest rating in the country for these instruments in view of the hybrid and high-risk nature of these instruments.

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 2 bonds last month by SBl, aggregating to Rs 8,931 crore, at 6.80%, which is again the best ever pricing for Tier 2 debt instruments. Both the issuances were solely managed by SBI Capital Markets.

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.