SBI raises Rs 3,717 crore through sale of AT1 bonds

State Bank of India

The country’s largest lender SBI raises Rs 3,717 crore through its third Basel III compliant Extra Tier 1 bond issue in the current fiscal year at an 8.25% interest rate, on Wednesday.

The bond proceeds will be used to supplement the bank’s additional Tier 1 capital and total capital base, as well as to increase capital adequacy in accordance with RBI guidelines.

The term of these bonds is perpetual, with a call option after ten years and on each anniversary after that.

The issue received overwhelming bids of Rs 4,537 crore and was oversubscribed by about 2.27 times the base issue of Rs 2,000 crore. The investors included provident and pension funds, as well as insurance companies.

Prior to this, the bank raised Rs 4,544 crore in Additional Tier 1 Bonds on 21 February 2023 at a spread of 71 basis points over the comparable FBIL G-Sec par curve on the date of bidding. Domestic credit rating agencies have assigned the bank an AA+ credit rating with a stable outlook for these securities.

Basel III AT1 bonds with a 5-year call option are worth Rs 41,581.70 crore, while AT1 bonds with a 10-year call option are worth Rs 8,261 crore of the bank’s total outstanding Additional Tier 1 Bonds.

Also Read | SBI lends Rs 200 million to Red Fort Capital to boost “Quick Business Loan” portfolio

State Bank of India (SBI) is a public sector banking and financial services statutory body in India. The Government of India owned 57.50% of the bank as of December 31, 2022.

In Q3 FY23, the PSU major recorded a 68.47% increase in standalone net profit to Rs 14,205.34 crore on a 25.18% increase in total income to Rs 98,083.77 crore compared to Q3 FY22.

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