SBI raises Rs. 4,000 cr via AT1 bonds at a coupon of 7.74%

State Bank of India sold Rs 4000 crore of Basel compliant Additional Tier 1 (AT1) bonds at a coupon of 7.74%. This is the lowest pricing ever offered on such debt, issued by any bank since the country started implementing the stringent Basel II capital rules in 2013. As the aggregate bids were in excess of Rs. 6,000 crore, the Bank exercised the full green shoe option of Rs.3,000 crore over and above the base issue size of Rs. 1,000 crore.

While State Bank of India has AAA credit rating from local credit agencies, its AT1 offering is rated AA+, which is the highest rating in the country for these instruments in view of the hybrid and high-risk nature of these instruments. While the AT 1 instrument is perpetual in nature, it can be called back by the lender after five years or any anniversary date thereafter. This issuance comes after a successful issue of Tier 2 bonds last month by SBl, aggregating to Rs.8,931 crore, at 6,80%, which is again the best ever pricing for Tier 2 debt instruments. Both the issuances were solely managed by SBI Capital Markets.

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