State Bank of India board approves raising up to $2 bn via long term debt

Public sector lender State Bank of India (SBI) in its Executive Committee of the Central Board on Tuesday approved to examine the status and decide on long term fund-raising in single or multiple trenches up to US $2 Billion.

SBI said that the fund raising of up to $2 billion would be done in single or multiple trenches through a public offer or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2023-24.

“Executive Committee of the Central Board in its meeting on 18 th April 2023 has approved, inter alia, the following: To examine the status and decide on long term fund raising in single / multiple tranches up to US$ 2 Billion (US$ Two Billion) under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2023-24,” said SBI in its regulatory filing.

Last month, SBI raised ₹3,717 crore through its third Basel III compliant Additional Tier 1 bond issuance for FY23, at a coupon rate of 8.25%. The tenor of these bonds is perpetual with a call option after 10 years and every anniversary thereafter.

However, the AT1 issue attracted an overwhelming response from investors with bids of ₹4,537 crore and was oversubscribed by about 2.27 times — against the base issue of ₹2,000 crore. The investors were across provident & pension funds & insurance companies. Based on the response, SBI decided to accept ₹3,717 crore at a coupon rate of 8.25% which is payable annually.

SBI plans to utilise the proceeds from these bonds for augmenting Additional Tier 1 Capital and the overall capital base of the bank and for strengthening capital adequacy in accordance with RBI guidelines.

On Tuesday, the company’s scrip ended 0.33 per cent up at ₹545.80 on BSE.

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