SBI raises Rs 4,000 cr via Tier 2 bonds

SBI raises Rs 4,000 cr via Tier 2 bonds

State Bank of India (SBI) on Wednesday raised Rs 4,000 crore through Basel-III compliant Tier 2 bonds, the lender said in a release. Funds were raised at a coupon rate of 7.57% payable annually for a tenure of 15 years with a call option after 10 years. This represents a spread of 14 bps over 10-year G-Sec.

SBI said the bonds attracted overwhelming response from investors with bids of ₹9,647 crore, and were oversubscribed by about 5 times against the base issue size of ₹2,000 crore.

The bank has ‘AAA’ (stable) credit rating from domestic credit rating agencies for these instruments. The bank has a strong resource profile, driven by high share of current and savings account (CASA) deposits, resulting in an extremely competitive cost of funds and a granular deposit base, leading to superior liquidity profile, ratings agency ICRA has said in a report.

SBI’s capital adequacy ratio was at 13.4% in the June quarter, compared with 13.7% in the corresponding quarter a year ago.