While the country’s largest lender raised ₹6,872 crore offering 7.75%, the Pune-based lender raised ₹710 crore offering 8.74%. Bond sales were up for bidding Wednesday.
Private banks including
, and are said to have bought those additional tier 1 (AT-1) SBI bonds, which were priced with the finest spread to similar maturity sovereign bonds.
National pension schemes from
and UTI too bought those bonds along with select insurers and a few mutual funds, market sources told ET.
SBI did not comment on the matter immediately. Individual investors could not be contacted immediately.
SBI Capital Market helped the banking behemoth to raise the bonds, which are likely to strengthen the bank’s capital base by up to 30 basis points. A basis point equals 0.01%
State-owned lenders including , and likely purchased bonds, marked as quasi-equity.
AT1 bonds, also known as perpetual bonds, do not have any fixed maturity but offer relatively higher rates as those are considered quasi-equity instruments with larger risk of investment. The proceeds augment banks’ capital base.
India’s bellwether banks including SBI and
were aiming to raise up to ₹10,000 crore this week, ET reported on September 5. Yield range was expected to be 7.70-7.80%.
“The SBI issue was well distributed across investors as the credit is most acceptable,” said Ajay Manglunia, managing director and head of debt capital market at
. “The pricing was quite finer amid higher investor demand. The differential with the sovereign gauge is the finest ever for perpetual papers by any bank,” he said.
AT1 papers come with a five-year call option. Accordingly, the difference with the five-year government bonds came around 59 basis points annualised. The matrix was as much as 159 basis points last time in December, 2021 when SBI had sold perpetual papers yielding 7.55%.
Ratings graded SBI perpetual bonds AA+ (Stable) while the bank’s tier II bonds are rated triple-A (Stable).
ICRA believes SBI’s incremental capital requirements remain limited for the targeted growth.
HDFC Bank Tuesday raised ₹3,000 crore via perpetual bonds, which offered 7.84% with a five-year call option. ET wrote on Monday that the bank was raising such bonds, which were expected to offer rates in the range of 7.80-7.95%. The move will add to the bank’s capital strength by 25-30 basis points.
Successful fundraising by Bank of Baroda has stirred the AT1 bond primary market, raising hopes for borrowers.
Bank of Baroda last week mopped up ₹2,474 crore via perpetual bonds that offered 7.88% in what was being billed as “fine pricing”.
Of late, other banks intended to price their papers benchmarking them with the BoB pricing.