SBI Plans To Raise Up To Rs 5,000 Crore Via Tier-I Bond

The State Bank of India plans to raise up to Rs 5,000 crore through an additional Tier-I bond issue and has invited bids for the same on Wednesday, three people with knowledge about the matter told NDTV Profit.

The issue has a base size of Rs 2,000 crore and a greenshoe option of Rs 3,000 crore. Bidding for this bond will take place on the BSE's electronic platform from 10:30 am to 11:30 am.

The bonds, rated 'AA+' by Crisil Ratings, carry a call option after 10 years, the above-mentioned people said. The allotment date of this bond issue is Thursday.

SBI Capital Markets Ltd. is the arranger for this bond issue. This is SBI's first Tier-I bond issue in the current financial year.

Market participants have been keenly watching out SBI's Tier-I bond issue as it will set precedence for other banks in the market, especially after the Securities Exchange Board of India earlier this year eased the valuation norms on such papers.

Basel-III compliant Tier-I bonds are essentially perpetual bonds that have trigger points linked to a bank’s capital and earnings. If these triggers are breached, it can lead to interest payments being stopped. This situation could even lead to the conversion of the bond into equity.