 "SBI, state bank of India")
Country’s largest lender, State Bank of India (SBI), has raised Rs 3,101 crore capital via additional tier I bonds (AT1) at a coupon of 8.1 per cent. This is 15 basis points lower than the pricing for its previous AT1 bond issued at 8.25 per cent in March.
The base issue size for AT1 bonds was Rs 3,000 crore, with green shoe of Rs 7,000 crore. Rating agency CRISIL has assigned an "AA+" rating to AT1 bonds (Under Basel III regulations).
Bond market dealers said while lenders got bids worth Rs 5,900 crore, investors were asking for higher levels of yields (up to 8.25 per cent). So the bank decided to take up the portion of demand at yields it was comfortable with. Thus, the amount raised would be just over the base issue size.
There is no pressure for lenders to raise capital at any price. Its capital adequacy is comfortable, and it can wait for better pricing in the coming months. According to CRISIL, SBI (standalone) had adequate capitalisation as indicated by Tier-I of 12.1 per cent and overall capital adequacy ratio of 14.7 per cent as of March 31.
When SBI raised money in March at 8.25 per cent, the system was still in the phase of rate-hardening. Now, the market is looking for stability with one or two rate hikes by the US Federal Reserve. Back home in India, the Reserve Bank of India has been in "pause" mode as far as decisions about the policy repo rate are concerned, dealers said.
Out of the total Rs 50,000 crore bond issuance plan for FY24, Rs 20,000 crore will be from AT1 bonds, including this week’s proposed offering. It also has plans to issue tier-II bonds worth Rs 10,000 crore and the balance would be through infrastructure bonds in 2023-24.
