State Bank of India Raises Rs 4,691 Crore via AT1 Bonds

The State Bank of India raised Rs 4,691 crore by issuing its first Basel III-compliant Additional Tier 1 (AT1) bonds of the current financial year. These perpetual bonds, which carry a 7.75% annual coupon rate, are intended to diversify long-term non-equity regulatory capital and fund business growth.

The issuance attracted significant demand from 89 qualified institutional bidders, including mutual funds, pension funds, banks, and provident funds. Total bids exceeded twice the base issue size of Rs 3,000 crore. The bonds feature a call option after five years and include loss absorbency mechanisms that allow the bank to write off investments or convert them to common equity during financial stress, subject to Reserve Bank of India approval.

Crisil and Care Ratings both assigned the bonds an AA+ rating with a stable outlook. Chairman Challa Sreenivasulu Setty noted that the heterogeneity and volume of the bids demonstrated investor trust in the institution.