SBI to raise Rs 6,000 crore in capital through additional tier-I bonds

State Bank of India, which raised Rs 4,000 crore in capital through additional tier I bonds (AT1 bonds) in September, is planning another round of AT1 bond issuance of Rs 6,000 crore to replace maturing securities.

Executives at the country’s largest lender said the bank had an adequate capital base to support business growth and meet regulatory norms.

Its capital adequacy ratio (CAR) stood at 13.66 per cent with tier-I of 11.32 per cent at the end of June. The Common Equity tier I (CET1) was 9.91 per cent and AT1 was 1.41 per cent in June.

The AT1 instrument is perpetual in nature, however, it can be called back by the issuer after five years or any anniversary date thereafter. While the bank has an AAA credit rating, the AT1 offering is rated AA+ due to the hybrid and high-risk nature of these instruments.

In September, SBI raised Rs 4,000 crore through AT1 bonds. The coupon (interest rate) was fixed at 7.72 per cent, the lowest pricing ever offered on such debt issued by any Indian bank since the implementation of Basel III capital rules in 2013.

This was SBI’s first AT1 bond issuance in the domestic market after the new Sebi regulations kicked in. The issue had received bids in excess of Rs 10,000 crore against a base issue size of Rs 1,000 crore.

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