SBI raises Rs 4,000 crore via AT1 bonds, coupon fixed at 7.72%

This was SBI's first such issuance at home after Sebi's new rules; bids in excess of Rs 10,000 crore were received against a base issue size of Rs 1,000 crore

The country’s largest lender State Bank of India (SBI) has raised Rs 4,000 crore in capital through the Basel compliant Additional Tier 1 (AT1) bonds. The coupon for AT-1 bonds was fixed at 7.72 per cent.

This was SBI's first AT1 Bond issuance in the domestic market after the new Sebi regulations kicked in. The issue garnered an overwhelming response from investors, with bids in excess of Rs 10,000 crore received against a base issue size of Rs 1,000 crore, SBI said in a statement.

Based on the response, the Bank decided to accept Rs 4,000 crore at a coupon of 7.72%. This is the lowest pricing ever offered on such debt, issued by any Indian bank since the implementation of Basel III capital rules in 2013.

The fresh capital raise would help to bolster capital adequacy ratio (CAR) and replace AT1 bonds which are maturing over period in current financial year.  It stock closed 0.9 per cent higher at 429.7 per share on BSE.

Its Capital Adequacy ratio (CAR) stood at 13.66 per cent with tier I of 11.32 per cent at end June 2021. The Common Equity tier I (CET1) was 9.91 per cent and AT-1 was 1.41 per cent in June.

The AT1 instrument is perpetual in nature, however, it can be called back by the issuer after five years or any anniversary date thereafter.

While the Bank has AAA credit rating from local credit agencies, the AT1 offering is rated AA+, in view of the hybrid and high-risk nature of these instruments.