SBI to sell up to Rs 10,000 crore of AT-1 bonds this week

economictimes.indiatimes.com:

State Bank of India, the country's largest mass lender, is set to raise up to ₹10,000 crore of funds through the issuance of additional tier-1 bonds this week.SBI's AT-1 bond sale is likely to have a base size of ₹3,000 crore and a green shoe option of ₹7,000 crore as the bank looks to raise capital amid strong credit growth, sources aware of the development said. Bidding for the bond sale is seen taking place from 10:30 to 11:30 am on July 13.

Treasury officials said that the coupon — or the rate of interest paid to investors — could be around 8%. Given its status as the largest bank in the country, coupon rates for SBI's AT-1 bonds are generally the lowest amongst all lenders.

As on June 16, bank credit growth was at 15.4% year-on-year while deposit growth was at 12.1%, latest Reserve Bank of India data showed. The wide gap between credit and deposit growth has exerted pressure on banks to mobilise funds.

The bank had last tapped debt capital markets via the issuance of AT-1 bonds in March at a coupon rate of 8.25%. Since then, however, yields on government bonds — the benchmarks for pricing corporate bonds — have fallen sharply as the RBI unexpectedly paused rate hikes at its April review.