State Bank of India (SBI), the country’s largest lender, is likely to come up with its final bond issuance for the current financial year in the form of Basel III-compliant additional Tier I perpetual bonds this month, two sources directly aware of the development said on Thursday.
The state-run lender is looking to raise around Rs 4,000 to 5,000 crore ($480 – $600 million) via the issue and will likely invite bids over the next two weeks, the sources said.
Click here to follow our WhatsApp channel
Neither of the sources wished to be identified because they were not authorised to speak with the media.
SBI did not immediately reply to a Reuters email seeking comment.
“The bank has some call options of previously issued additional Tier I bonds in this fiscal and the aim is to at least match the outgoing amount, if not raise additional net capital,” one of the sources said.
The call option for bonds worth Rs 6,066 crores was exercised in December, while the call option for another Rs 1,251 crore debt is due in March.
The lender raised Rs 3,101 crore through perpetual bonds in July at a coupon of 8.10 per cent when the benchmark 10-year bond yield was around 7.15 per cent.
Merchant bankers said the lender may have to pay a higher coupon as they are looking to raise a larger quantum this time.
The bank has completed its fundraising via Tier II and infrastructure bonds for the current financial year, the source added.
Fundraising via bonds for SBI in FY24: Month Type of issuance Tenor Coupon Quantum April Dollar bond 5 yrs 4.8750 $750 million (semi) July Additional tier I perpetual 8.1 31.01 bn (10-yr call) rupees July Infrastructure 15 yrs 7.54 100 bln rupees September Infrastructure 15 yrs 7.49 100 bn rupees November Tier II 15 yrs 7.81 100 bln (10-yr call) rupees SBI has delayed its plans to come up with a dollar bond issue for the time being, the source quoted above said.
“U.S. yields are set to come down further and that would be a more conducive period to raise money via dollar bonds.” On Wednesday, SBI said it has raised $1 billion through a syndicated social loan.
The lender will also mull raising funds via green bonds in the next financial year and the talks are at an initial stage currently, the first person added.
Read More: SBI likely to issue perpetual bonds to wrap up FY borrowing: Report