SBI raises $300 million via bond issue
The notes, with a 5.5% coupon rate, will be issued through SBI's Dubai international finance centre and listed on Singapore Stock Exchange
Mumbai: State Bank of India (SBI) on Wednesday said it has raised $300 million through its US dollar perpetual bond issue. The notes, with a 5.5% coupon rate, will be issued through SBI’s Dubai international finance centre and listed on Singapore Stock Exchange, SBI wrote to stock exchanges.
This is the first such bond issue by an Indian bank.
“We wanted to test the waters and set a benchmark for Indian banks. The pricing of 5.5% is very good. If you see recent issuances, only DBS has gotten a better rate and they are rated better than us," said an SBI official on condition of anonymity.
“The first cross-border deal in the dollar AT-1 market from an Indian bank would open up a new source of much-needed regulatory capital and provide a pricing benchmark for other banks keen to access the dollar AT-1 market," said ratings agency Fitch Ratings in a statement.
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Ratings agency Moody’s Investor Services said it has placed a B1 (hyb) rating on the SBI issue. “The rating is positioned three notches below the bank’s adjusted baseline credit assessment (BCA) of ba1, in accordance with Moody’s standard notching guidance for contractual non-viability preferred securities with an optional, non-cumulative distribution-skip mechanism," Moody’s said in a statement.
The market had expected SBI to raise at least $500 million in the first tranche. However, the SBI banker quoted earlier said the bank chose tighter pricing over a larger volume.
The bank raised ₹ 2,100 crore by selling additional tier-1 (AT-1) rupee-denominated bonds to Yes Bank at 9% last week.
SBI had a capital adequacy of 14.01% at the end of June.
On 7 September, Mint had reported that the bank aims to raise $1 billion through an AT-1 dollar bond issue in at least two tranches. These perpetual bonds will be issued with a five-year call option, allowing the bank to buy them back from bondholders.
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