State Bank of India raises Rs 10,000cr with First Basel III compliant tier 2 bond issuance

State Bank of India (SBI), the nation’s leading lender, announced a significant financial milestone today, raising Rs. 10,000 crores through its first Basel III compliant Tier 2 Bond for the current financial year. These bonds, set at a coupon rate of 7.81%, have a maturity period of 15 years, featuring the first call option after 10 years.

Overwhelming Investor Interest in SBI’s Bonds

The bond issuance witnessed an extraordinary response, attracting bids totaling Rs. 15,907 crores. With 98 bids placed, the offering was nearly quadrupled in subscription compared to the base issue size of Rs. 4,000 crores. Shri Dinesh Khara, Chairman of SBI, reflected on the results: “Wider participation and heterogeneity of bids demonstrated the trust investors place in the country’s largest Bank.”

Details of SBI’s Bond Acceptance

Given the robust investor interest, SBI opted to accept Rs. 10,000 crores at the aforementioned coupon rate, payable annually. The tenor of these bonds is 15 years, with an option for the Bank to call the bonds after 10 years and on subsequent anniversaries. This Tier 2 Bond issuance marks the first for SBI in this financial year. Furthermore, the Bank boasts a AAA rating with a stable outlook from CRISIL and India Ratings & Research Private Limited for these instruments.

Closing Overview

This successful bond issuance by SBI not only underscores the Bank’s strong standing in the Indian financial market but also highlights the continued investor confidence in the country’s banking sector. The oversubscription of the bonds reflects a healthy appetite for quality financial instruments among investors, cementing SBI’s role as a key player in the Indian economy and the global banking industry. This move could set a precedent for future bond issuances within the sector, indicating a positive trajectory for the Indian banking system.