SBI plans more retail bonds

SBI plans more retail bonds

Mumbai: India’s largest lender, State Bank of India plans more retail bond issues after assessing the response to its first-ever such issue, scheduled to open next week, SBI Chairman O P Bhatt said. SBI’s 1,000 crore retail bond issue will open for subscription on 18 October and will close on 25th.

The issue is a part of its banks Tier II offering and will comprise issue of Rs500 crore with an option to retain over-subscription up to Rs500 crore for issuance of additional bonds aggregating to Rs1,000 crore.

We intend to do more such issues, may be every quarter. We will create a secondary market for these issues, so that exit becomes easy and price discovery takes place. Over a period of time this will help us build a bigger corpus of long term resources, Bhatt said.

SBI is launching the retail bonds in two series with 10 years and 15 years of maturity respectively. The bank is offering 9.25% per annum in the first series and 9.50 % per annum in the second series.

Citigroup, Kotak Mahindra Capital Co. and SBI Capital Markets Ltd. are the managers for the issue. The bonds are proposed to be listed on the National Stock Exchange of India (NSE).

The bank decided to come with the retail bond issue to test the market appetite for such instruments rather than to raise capital, Bhatt said.

We believe that at present the investment opportunities for investors are very limited, which needs to be increased. This bond issue will fulfill the need to a considerable extent, Bhatt said.