SBI raises Rs4,000 crore via Basel III Tier 2 bonds; stock under pressure

22 Sep 2022 , 09:15 AM

State Bank of India (SBI), raised Rs4,000 crore via Basel III compliant Tier 2 bonds on Wednesday, September 21, 2022, at a yield rate of 7.57%.

The offer received a tremendous reaction from investors, with bids totalling Rs9,647 crore, and was more than five times oversubscribed compared to the basic issue size of Rs2,000 crores. This reflects the confidence that investors have in the country’s major bank, said SBI on Wednesday.

Based on the responses, the bank has decided to accept Rs.4,000 crore at a coupon rate of 7.57%, payable yearly for a period of 15 years. It will have a call option after 10 years and on anniversary dates afterward. This indicates a spread of 14 basis points over a ten-year Gsec. On September 20, 2022, the 10-year SDL cut-off was 7.69% annualised.

Domestic credit rating agencies have assigned these instruments the AAA (stable) credit rating.

At around 9.18 AM, State Bank of India was trading at Rs565.10 down by 0.82% from its previous closing of Rs569.80 on the BSE.

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