SBI Raises ₹4,691 Cr via Basel III AT-1 Bonds

State Bank of India (SBI) announced on Wednesday that it successfully raised ₹4,691 crore through an issuance of Basel III-compliant Additional Tier 1 (AT-1) bonds. This capital infusion is intended to bolster the bank’s ongoing business growth initiatives.

Understanding the Fundraise

This issuance marks SBI’s first Tier I bond offering in the current financial year. The bonds were issued with a coupon rate of 7.75 percent, featuring a perpetual tenor and a call option available after five years, then on each subsequent anniversary date.

Key Figures: The total capital raised through this issuance amounts to 4,691 crore. These perpetual bonds carry a coupon rate of 7.75 percent annually. The base issue size for the offering was 3,000 crore, attracting a total of 89 bids.

Investor Confidence and Participation

The bond issue garnered a robust response from investors, with total bids exceeding two times the base issue size. This strong interest came from a diverse group of 89 qualified institutional bidders.

Investors included provident funds, pension funds, mutual funds, and other banks. CS Setty, Chairman of SBI, stated that this wide and varied participation underscores the trust placed in India’s largest bank.

How Basel III AT-1 Bonds Function

This successful issuance enables SBI to diversify its sources of long-term non-equity regulatory capital. Basel III AT-1 bonds are specifically designed with critical loss absorbency features.

In situations of financial stress, banks possess the option to write off these investments or convert them into common equity. Such actions are subject to approval from the Reserve Bank of India (RBI).

AT-1 bonds are recognized as core or equity capital within the regulatory framework. They serve as a vital instrument for public sector banks to raise capital, ensuring compliance with global capital adequacy standards like Basel III.