State Bank of India (SBI) said that through its third Basel III compliant Additional Tier 1 bond issuance in the current financial year, has raised INR 3,717 crores at a coupon rate of 8.25%.

The Indian lender plans to use the bond proceeds to increase its Additional Tier 1 Capital and its overall capital base as well as to increase the capital adequacy in line with the RBI Guidelines.

The term for the bonds is perpetual, with an option to call upon 10 years and on every anniversary after that, said State Bank of India.

The issue received a huge response from investors who offered around INR 437 crores in bids. The issue was also oversubscribed by approximately 2.27 times compared to the base issue of INR 2,000 crores, said the Indian lender.

According to State Bank of India, the total number of bids was 53 which showed broader participation. The investors were from pension and provident funds and insurance companies.

State Bank of India stated: “This issuance is also very significant as the Bank has been able to successively diversify and raise long term Additional Tier 1 capital with a call option after 10 years and this will help the bank in managing its capital adequacy effectively.

“Of the total outstanding of Bank’s Additional Tier 1 Bonds is Rs. 49,842.70 crores, Basel III AT1 bonds with call option of 5 years is Rs. 41,581.70 crores and AT1 bonds with call option of 10 years is Rs 8,261 crores.”

  Banking industry news, India, State Bank of India