Chennai, NFAPost: The country’s largest lender State Bank of India (SBI) has 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 bank since the country started implementing the stringent Basel III capital rules in 2013, SBI 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.
While State Bank of India 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.
While the AT 1 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 SBI, 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 Ltd, the bank said.
SBI Deputy MD- Finance Swaminathan J said, “The overwhelming success of this issuance reaffirms State Bank’s paper as Gold standard and showcases the investor interest for such quality papers. The apprehensions that prevailed in the market post Yes Bank AT 1 write down in March 2020 have been firmly put behind.”
He added, “The interest payout on such bonds is better than the cost of equity for the Banks and it provides a good risk-adjusted return to the investors, hence offers a win-win situation for both the Banks and the investors.”
SBI is the largest commercial bank in terms of assets, deposits, branches, customers, and employees. It is also the largest mortgage lender in the country. As on June 30, 2020, the bank has a deposit base of over Rs 34 lakh crore with a CASA ratio of more than 45% and advances of nearly Rs 24 lakh crore.
SBI commands nearly 34% market share in home loans and nearly 33% in the auto loans segment. The bank has the largest network of over 22,100 branches in India with an ATM / CDM network of over 58,500 and total BC outlets of more than 62,200.
The number of customers using internet banking facilities is about 76 million and mobile banking services stand a little more than 17 million. The integrated digital and lifestyle platform by SBI – YONO has crossed the landmark of 58 million downloads. YONO, which has 26 million registered users, witnesses 5.5 million logins per day along with over 4,000 daily disbursals of personal loans, 16,000 YONO Krishi Agri Gold Loans.
The bank recently launched the YONO Global app in the UK and Mauritius and plans to cover 9 more countries by the end of 2020.