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Rs 10,000 crore AT-1 Bonds likely to be sold by SBI around Feb 20

Feb 9, 2023

By: BlinkX Research Team

State Bank of India is in discussions to sell additional tier-1 (AT-1) bonds on or around February 20 in order to raise up to Rs 10,000 crore in capital The bonds may be put up for bid on February 20 with issuance planned for the following day. They are likely to obtain an AA+ rating, according to the sources. 

SBI had previously stated that it intended to raise up to Rs 10,000 crore through AT-1 bonds by the  end of the following fiscal year in order to promote company expansion. The base amount is reportedly Rs 2,000 crore, and the greenshoe option is potentially Rs 8,000 crore. After ten years, there will probably be the first call option. Banks are seeking cash as credit expansion continues to outpace deposit growth.

In order to raise capital during the past few months as deposit growth has continued to significantly lag behind credit growth, banks have engaged in a flurry of debt issuances. This has put pressure on banks to raise money to finance the expansion of loans. Banks have been rapidly hiking deposit rates over the past few months in an effort to raise money amid the demand to fund the rapid increase of loans. As a result, banks may have pressure to continue maintaining the current high levels of net interest margins in the future.