State Bank of India raises Rs 5,000cr through Additional Tier 1 bonds at 7.98%

State Bank of India (SBI), the country’s largest public sector lender, has successfully raised ₹5,000 crores through its first Basel III compliant Additional Tier 1 (AT1) bond issuance for the current financial year. This issuance was completed at a competitive coupon rate of 7.98%, marking a significant move by the bank in diversifying and strengthening its long-term non-equity regulatory capital.

The bank received an overwhelming response, with bids totaling more than 3.5 times the base issue size of ₹2,000 crores. A total of 108 bids came from a diverse set of institutional investors, including provident funds, pension funds, insurance companies, mutual funds, non-banking financial companies (NBFCs), and other banks. SBI Chairman, Shri C.S. Setty, stated that this broad participation underscores the trust that investors place in SBI as the nation’s leading financial institution.

SBI’s Strategic Bond Issuance Receives Overwhelming Investor Interest

The issuance, rated AA+ with a stable outlook by CRISIL Ratings Limited and CARE Ratings Limited, is perpetual with a call option available after 10 years and on each subsequent anniversary. This strategic issuance not only highlights SBI’s ability to tap into diverse pools of capital but also reinforces its position as a trusted financial entity among institutional investors.

According to regulatory filings under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the issuance aligns with SBI’s objectives to strengthen its capital base and support its ongoing business expansion. SBI’s DGM (Compliance & Company Secretary), Aruna N Dak, confirmed that the bonds are designed to comply with Basel III norms, aimed at enhancing the bank’s ability to manage potential risks and maintain financial stability.

The successful bid response reflects investor confidence, especially as SBI’s financial strategies continue to align with robust market demands. SBI’s consistent adherence to regulatory frameworks and transparent communication further cements its position as a reliable entity in the Indian banking sector.

Expert Analysis: Strong Investor Confidence in SBI

A banking expert remarked that the success of SBI’s AT1 bond issuance at such competitive rates signifies a high level of confidence among institutional investors in SBI’s growth trajectory. He noted that such a response, especially given the varied profiles of the bidders, showcases the bank’s effective positioning and strategic foresight in capital management.