SBI raises ~4,000 cr via perpetual bonds

Coupon set at 7.72% in 1st domestic issue after new norms

State Bank of India (SBI) said on Wednesday that it has raised ~4,000 crore through additional tier-1 (AT1) bonds. The issue received overwhelming response, SBI said, and the coupon was fixed at 7.72 per cent.

This is the first such issue in the domestic market since the Securities and Exchange Board of India (Sebi) introduced valuation norms in April. The issue garnered overwhelming response from investors with bids in excess of ~10,000 crore received against a base issue size of ~1,000 crore, SBI said.

Based on the response, the bank decided to accept ~4,000 crore at a coupon of 7.72 per cent. This is the lowest pricing offered on such debt issued by any Indian bank since the implementation of Basel-iii capital rules in 2013.

SBI executives said the capital is being raised to replace AT1 bonds (about ~7,000-8,000 crore) that are maturing over the coming months. It is looking to raise up to ~14,000 crore through AT1 bonds. About raising the rest of the amount, SBI said it will take a call based on market conditions.

Its capital adequacy ratio (CAR) stood at 13.66 per cent with tier-i of 11.32 per cent at the end June. The common

equity tier-i (CET1) was 9.91 per cent and AT1 was 1.41 per cent in June. Its stock rose marginally to 429.7 per share on the BSE Sensex.

AT1 bonds are perpetual and can be called back by the issuer after five years or any anniversary date thereafter.