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Tuesday, June 15, 2021

SBI rises 2% on raising Rs 4,000 crore via AT1 bonds

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NEW DELHI: State Bank of India (SBI), the largest mortgage lender in the country, saw its shares rise 2 per cent in Thursday’s trade after the state-run bank sold Rs 4,000 crore worth of Basel-compliant Additional Tier 1 (AT1) bonds at a coupon rate of 7.74 per cent.

In financial parlance, AT1 bonds are issued by banks to raise capital to meet the Basel-III norms.

Following the development, the stock rose 2.36 per cent to hit a high of Rs 199.50.

SBI is the largest commercial bank in terms of assets, deposits, branches, customers, and employees.

“This is the lowest pricing ever offered on such debt, issued by any bank since the country started implementing the stringent Basel-III capital rules in 2013,” a statement said.

“As the aggregate bids were in excess of Rs 6,000 crore, the bank exercised the full greenshoe option of Rs 3,000 crore over and above the base issue size of Rs 1,000 crore.”

According to the statement, while SBI has ‘AAA’ credit rating from local credit agencies, its ‘AT1’ offering is rated ‘AA+’, which is the highest rating in the country for these instruments in view of the hybrid and high-risk nature of these instruments.

“This issuance comes after a successful issue of Tier 2 bonds last month by SBI, aggregating to Rs 8,931 crore, at 6.80 per cent, which is again the best ever pricing for Tier 2 debt instruments,” the statement said.

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