Days ahead of launch of its Rs 1,000 crore retail bonds issue, the country's largest lender State Bank of India today said it is likely to offer many more such issues every quarter.
State Bank of India will launch its up to Rs 1,000 crore retail bond issue on October 18. The issue is a part of its Tier II offering and will comprise an issue of Rs 500 crore with an option to retain over-subscription up to Rs 500 crore for issuance of additional bonds totalling Rs 1,000 crore.
"The bank would launch first of its kind offering of bond issue to raise up to Rs 1,000 crore from retail investors next week, and will have a range of such products in future," State Bank of India's Chairman O P Bhatt told reporters here.
To a query on more such offerings, Bhatt said the bank is likely to offer many more retail bond issues every quarter.
"Going forward, we intend to do more bond issues. We want to create a secondary market for these issues, so that exit becomes easy and price discovery takes place," Bhatt said, adding "over a period of time this will help us build a bigger corpus of long term resources."
"We believe that at present the investment opportunities for investors are very limited, which needs to be increased. This bond issue will fulfil the need to a considerable extent," Bhatt said.
The bonds will be issued in two series--Series 1 and Series 2 having maturity of 10 years respectively, with a face value of Rs 10,000 each. These bonds are not redeemable at the option of the bondholder or without the prior consent of RBI.
The bonds are proposed to be listed on the National Stock Exchange of India (NSE).
The bonds will be open for subscription from October 18 and will close on October 25, with an option to close earlier in the event of over-subscription. The allocations of all categories will be made on first come first serve basis based on the date of applications.
The bonds will carry a coupon rate of 9.25 per cent per annum for series 1 and 9.50 per cent per annum for series 2 (both of lower Tier II bonds).
The bond issue will also help SBI "pre-empt" and assuage concerns arising out of the mismatch between long-term assets and liabilities on its balance-sheet, Bhatt said, adding the issue had also featured in the Basel III negotiations and has the potential to become a big issue going forward.
Currently, nearly 50 per cent of SBI's deposits are the cheap CASA while of the balance, nearly 90 per cent, comprises term deposits of under one-year tenor, he said.
"The bonds are to pre-empt any such concerns and we get long funds as they are having a maturity of 10-12-years," he said.