State Bank of India (SBI), may approach the debt market to issue additional tier-1 bonds or perpetual bonds, according to sources in the bond market. \u201cWe are not yet sure of the quantum, but it is likely to be close to Rs 2,500 crore. SBICaps is likely to be the banker to the deal. The bank is most likely to directly place the issue with a large player on a private placement basis, but the option to approach the open market is also there,\u201d a bond market participant said. Perpetual bonds do not have a fixed maturity period. For the same reason, yields on these instruments tend to be a bit higher than those of a conventional non-convertible debenture. These bonds qualify as tier-I capital of banks. Prior to this, SBI had issued a perpetual bond in October last year to raise Rs 2,500 crore at a coupon rate of 8.39%. Bond arrangers said the yield on the bank's perpetual bonds is currently trending in the range of 8.25-8.28% in the secondary market. The pricing of a primary market issuance is usually based on where the secondary levels are trading. \u201cIf the bank approaches the market any time soon for its perpetual bond issue, it is likely to get a yield close to 8.25-8.30%,\u201d said a bond market expert. SBI recently raised Rs 15,000 crore via qualified institutional placement (QIP) by selling 522 million shares at Rs 287.25 per equity share. The issue was oversubscribed considerably. According to SBI\u2019s results during the fourth quarter of the previous fiscal, the bank's additional tier-1 ratio stood at 0.53%. There was considerable surge in issuance of perpetual bonds last year, with banks getting busy shoring up their tier-1 capital. Bloomberg data show over Rs 23,000 crore of perpetual bonds have been issued this calendar year. Recently, Axis Bank priced its additional tier-1 bonds at 8.75% to raise Rs 3,500 crore. HDFC Bank also did a massive AT-1 bond issue worth Rs 8,000 crore. It is noteworthy that spreads on perpetual bonds have fallen since the Reserve Bank of India relaxed the norms for coupon-servicing of such bonds.