SBI may raise Rs 1k cr via retail bonds

State Bank of India (SBI) was looking to raise at least Rs 1,000 crore through its second retail bond issue and was likely to launch it by February, an official close to the development said.

“We intend to do one retail bond issue every quarter. The second retail bond issue in February would be larger than the initial issue on account of a high appetite for the instrument that led us to close the issue ahead of the scheduled date,” the official said.

The bank is also considering retaining an equal amount from retail investors under the greenshoe option.

When SBI first launched its retail bond issue for Rs 500 crore in October, it was subscribed 20 times, forcing the country’s largest lender to cut short the issue period by four days.

The rate of interest offered on the retail bonds is likely to remain the same as the for first issue.

SBI has offered 10-year bonds at 9.25 per cent, payable annually. The bonds would have a call option at the end of five years. It has also offered 15-year bonds at 9.5 per cent, payable annually, having a call option at the end of 10 years. If the option is not exercised, the coupon would be raised by 50 basis points.

On December 30, SBI said it could raise up to Rs 10,000 crore through retail bonds by March 2012. It has the approval to raise these funds through various tranches. The board has also approved raising Rs 1,000 crore through bonds, with a green shoe option of another Rs 1,000 crore.