SBI raises Rs 7,500 cr via Basel III compliant Tier 2 bonds

The bonds are issued for a tenor of 15 years, with a call option after 10 years and each anniversary date after that.

"The issue attracted an overwhelming response from investors with bids in excess of Rs. 8,800 crores against the base issue size of Rs. 5,000 crores," the bank said.

The total number of bids received was 70 indicating wider participation with heterogeneity of bids. The investors were across provident funds, pension funds, mutual funds, banks etc.

C S Setty, Chairman said that wider participation and heterogeneity of bids demonstrated the trust investors place in the country’s largest bank.

"Based on the response, the bank has decided to accept Rs. 7,500 crores at a coupon rate of 7.42% payable annually for a tenor of 15 years with a call option after 10 years and each anniversary dates thereafter," SBI said.

The instrument is rated AAA with a stable outlook from ICRA Limited and India Ratings & Research Private Limited.

Tier-II bonds are a component of a bank’s borrowing structure, carrying lower risk compared to Tier-I bonds in the event of a default. As subordinated debt, Tier-II bonds do not have priority claims on a bank’s assets during liquidation.

The most recent Tier-II bond issue by SBI occurred in late 2023, raising Rs 10,000 crore through a 15-year bond with a coupon rate of 7.81%.

In the current fiscal year, SBI has already raised Rs 20,000 crore through two tranches of infrastructure bonds.

Tier-II bonds are a component of a bank’s borrowing structure, carrying lower risk compared to Tier-I bonds in the event of a default. As subordinated debt, Tier-II bonds do not have priority claims on a bank’s assets during liquidation.

The most recent Tier-II bond issue by SBI occurred in late 2023, raising Rs 10,000 crore through a 15-year bond with a coupon rate of 7.81%.

In the current fiscal year, SBI has already raised Rs 20,000 crore through two tranches of infrastructure bonds.