State Bank of India raises Rs 5,000 crore through AT1 bonds

The country’s largest lender State Bank of India has raised Rs 5,000 crore through its second Basel III compliant Additional Tier 1 (AT1) bond sale this financial year.

The perpetual bond with a call option after 10 years and each anniversary thereafter is priced at a coupon of 8.34 per cent, the bank said in a statement on Thursday.

The issue received an overwhelming response from a range of investors with 108 bids amounting to Rs 5,294 crore against the base issue size of Rs 2,000 crore, with 2.65 times oversubscription. Key investors include mutual funds, provident and pension funds, banks and insurance companies, the statement said.

Its chairman Dinesh Khara said tight pricing and a diverse investor base for an instrument that has its own challenges reflects investor confidence in the bank.

The chairman said considering the high response, the bank has decided to accept bids for Rs 5,000 crore at a coupon rate of 8.34 per cent payable annually.

The bonds were given an AA+ rating with a stable outlook. The issue is significant as the bank is able to diversify and raise long-term non-equity regulatory capital.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)