SBI raises Rs 3,101 crore of funds through AT-1 bonds

14 Jul 2023 , 09:37 AM

State Bank of India reportedly raised funds worth Rs 3,101 crore through the issue of Additional Tier – 1, or perpetual, bonds at a coupon of 8.10%.

The AT-1 bonds include a 10-year call option. The sale’s issue size was Rs 3,000 crore. The sale further includes an additional subscription option of Rs 7,000 crore.

AT-1 bonds are considered riskier than other debt instruments because they can be written down before equity, resulting in losses for investors. Investors in YES Bank’s AT-1 bonds suffered such losses in 2020, while perpetual bonds were written off globally following Credit Suisse’s bailout.

Given the government’s ownership of SBI and its position as the country’s largest bank, the lender’s bonds typically have the lowest coupon rates in the industry.

The bond sale on Thursday is the first AT-1 issuance by an Indian bank since the Credit Suisse crisis in March.

Additionally, the board of directors of SBI approved a Rs 50,000 crore bond issue in the current fiscal year in June.

At around 9.29 AM, SBI was trading 0.69% higher at Rs 589.70, against the previous close of Rs 585.65 on NSE.

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