Cheap borrowing costs help SBI raise Rs 4,000 cr via risky AT1 bonds at record low coupon rate

By: |
Updated: Sep 10, 2020 9:07 AM

The interest payout on such bonds is better than the cost of equity for the banks and it provides a good risk-adjusted return to the investors, he added.

SBI, sbi AT1 bonds, Basel III capital rules,  sbi AT1 bonds coupon rate, latest news on SBIThe bank has claimed that it has been the lowest pricing ever offered on such debt issued by any bank since the country started implementing Basel III capital rules in 2013.

State Bank of India (SBI) on Wednesday said it had raised Rs 4,000 crore through additional tier 1 (AT1) bonds at a coupon rate of 7.74%. The bank has claimed that it has been the lowest pricing ever offered on such debt issued by any bank since the country started implementing Basel III capital rules in 2013.

“As the aggregate bids were in excess of Rs 6,000 crore, the bank exercised the full greenshoe option of Rs 3,000 crore over and above the base issue size of Rs 1,000 crore,” it said. While the AT1 instrument is perpetual in nature, it can be called back by the lender after five years or any anniversary date thereafter, the bank said.

Swaminathan J, deputy MD, SBI, said, “The apprehensions that prevailed in the market post the Yes bank AT1 write-down in March 2020 have been firmly put behind.”

The interest payout on such bonds is better than the cost of equity for the banks and it provides a good risk-adjusted return to the investors, he added.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Asset quality issues to hit NBFC profitability in FY21 and beyond, says Ind-Ra
2Banks’ recovery from pandemic to take long, say rating agencies
3Credit card spends may soon be at pre-Covid levels: Kotak Mahindra Bank