NEW DELHI: State Bank of India’s (SBI) latest tier-2 bond issue attracted overwhelming response from the market, with bids soaring to over three multiples of the base issue size of Rs4,000 crore.
“This reflects the strong investor confidence in the country’s largest lender at a time when banks are scurrying for deposits,” a banking analyst told businessbenchmark.news.
Coupon at 7.33%
SBI raised Rs7,500 crore through this Basel III-compliant bond offering at a 7.33 per cent coupon rate, with the bond carrying a 15-year tenor and a call option after 10 years.
A total of 77 bids came from a wide range of institutional investors, including provident funds, pension funds, mutual funds, and banks.
AAA rating
The robust response underscores market trust in SBI’s stability and growth trajectory. Rated AAA with a stable outlook by CRISIL and CARE Ratings, the bonds attracted significant attention as SBI continues to expand its fundraising efforts.
With this second issue of the fiscal year, SBI has raised a total of Rs15,000 crore in FY25 via tier-2 bonds, moving closer to its broader target of Rs25,000 crore through tier-1 and tier-2 instruments.
Total now Rs7,500cr
Earlier, in August 2024, the bank raised another Rs7,500 crore at a 7.42 per cent coupon rate.
SBI’s stock has also reflected growing investor confidence, rising 1.3 per cent to Rs793 on Wednesday, with its market valuation crossing Rs7 lakh crore.
The stock has surged 24 per cent this year, outperforming the benchmark NSE Nifty 50, which has gained 17 per cent over the same period.
Focus shifts to tier1 bond
With the funds earmarked for meeting regulatory capital requirements and supporting business expansion, this could be SBI’s final tier-2 bond issuance for FY25, leaving around Rs10,000 crore in room for potential tier-1 (AT-1) bond issuances.
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