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SBI seeks to raise ₹10,000cr in tier-1 bonds

July 10, 2023

SBI seeks to raise ₹10,000cr in tier-1 bonds
The country’s largest lender, State Bank of India (SBI), is looking to raise up to ₹10,000 crore capital via additional tier I bonds (AT1) in the coming week. However, the recent spike in yields in the last two weeks has made it weigh on the costs of locking in at higher yields.

Debt market sources said the AT1 bonds raise, tentatively scheduled for July 13, is for twin purposes of supporting business growth and replacing instruments (bonds) that are maturing. The bank would decide on actual bond issuance based on the yield level in the market, which hardened in the last two weeks.
 
The yield on the benchmark 10-year Government of India bonds closed at 7.15-16 percent level at the end of the week (July 07) from 7.07 per cent a fortnight ago (June 23), according to data from Clearing Corporation of India (CCIL) and CARE Ratings.  
 
SBI executives said out of the total ₹50,000 crore bond issuance plan for FY24, ₹20,000 crore will be AT1 bond offering including this week’s proposed offering. It also has plans to issue tier-II bonds worth ₹10,000 crore and balance would be through infrastructure bonds in 2023-24. The board has given approval for this year’s bond raising plan. Rating agency Crisil has assigned “AA+” rating to Tier I Bonds (Under Basel III regulations).
 
According to JM Financial Services group data, banks in total raised ₹6,635 crore through tier-II and infrastructure bonds in the first quarter. There was no issuance of additional tier-I bonds in April-June 2023. In FY23, banks on an aggregate basis raised ₹1.13 trillion via bonds. Out of which AT 1 issuance was for ₹34,394 crore, Tier II bonds ₹59,686 crore and infrastructure bonds – ₹19,900 crore. SBI had issued AT1 bonds worth ₹15,133 crore in FY23.
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