September 25, 2021

The World Live Breaking News Coverage & Updates IN ENGLISH

The World Live Breaking News Coverage & Updates IN ENGLISH

SBI raises Rs 4,000 crore from AT1 bonds

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, SBI raises Rs 4,000 crore from AT1 bonds, The World Live Breaking News Coverage & Updates IN ENGLISH
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, SBI raises Rs 4,000 crore from AT1 bonds, The World Live Breaking News Coverage & Updates IN ENGLISH
, SBI raises Rs 4,000 crore from AT1 bonds, The World Live Breaking News Coverage & Updates IN ENGLISH

MUMBAI: The State Bank of India (SBI) has raised Rs 4,000 crore of additional tier-1 (AT1) bonds, offering a coupon rate of 7.72%. This comes close on the heels of HDFC Bank raising $1 billion through issue of AT1 bonds in the international market.
Meanwhile, Axis Bank has already tapped the international market to raise AT1 bonds. Several other public sector banks are looking at issuing the bonds — both locally and in the international market — following the good response to recent issues. According to bankers, there is fresh interest for AT1 bonds as these offer a higher rate of return and yields are very low in the debt market.
Public sector bonds are seen as low-risk investments because of government ownership. SBI’s bonds received bids in excess of Rs 10,000 crore, which is nearly 10 times the base size of Rs 1,000 crore. “Based on the response, the bank has decided to accept Rs 4,000 crore at a coupon of 7.72%,” the country’s largest bank said.
The returns on these bonds are higher than conventional debt instruments as AT1 is seen as an equity-like instrument since it bears some risk. SBI’s pricing is the lowest ever offered on such debt issued by any Indian bank since the implementation of Basel III capital rules in 2013, the bank said.
While the bank has AAA credit rating from local credit agencies, the AT1 offering is rated AA+, which is the highest rating in the country for these instruments in view of their hybrid and high-risk nature, the bank said.

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