Shares of State Bank of India (SBI) jumped over 3% Thursday after India’s largest lender raised Rs 4,000 crore via AT1 bonds.
The state owned lender sold Rs 4,000 crore of the Basel compliant Additional Tier 1 (AT1) bonds at a coupon of 7.74%.
This is the lowest pricing ever offered on such debt, issued by any lender since the country started implementing the stringent Basel ll capital rules in 2013.
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.
These bonds have AAA credit rating from local credit agencies and 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.
AT1 instrument is perpetual in nature, it can be called back by the lender after five years or any anniversary date thereafter. This issuance comes after a successful issue of Tier 2 bonds last month by SBl, aggregating to Rs 8,931 crore, at 6.80%, which is again the best ever pricing for Tier 2 debt instruments. Both the issuances were solely managed by SBI Capital Markets.
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