SBI raises ₹15,000 cr via Basel III bonds in a month

Shares of State Bank of India (SBI) ended 1% higher on Wednesday after the country’s largest commercial lender informed exchanges that it raised ₹7,500 crore via Basel III bonds, at a coupon rate of 7.33%. This is the second time in less than a month that the PSU bank has raised capital through the issuance of Basel III compliant Tier-2 bonds to qualified institutional bidders. In the current fiscal, the public sector lender has raised a total of ₹15,000 crore through the issuance of Tier-2 bonds in two equal tranches to meet regulatory requirements and support business growth.

Following the announcement, shares of SBI gained as much as 1.46% to ₹794.50 on the BSE, before settling at ₹792.35, up 1.19%, with a market capitalisation of ₹7.07 lakh crore. Early today, the shares of SBI opened a tad higher at ₹783.55 against the previous closing price of ₹783.05.

At the current level, SBI shares trade 13% lower than its all-time high of ₹912.10 touched on June 3, 2024, while it has risen 46% against its 52-week low of ₹543.15 hit on October 26, 2023. The banking heavyweight has delivered 31% return to its shareholders in the last one year, while it rose over 8% in six months. In the calendar year 2024, the PSU stock has added over 23%, while it seen a correction of 3% in a month.

In an exchange filing this afternoon, SBI said that it raised ₹7,500 crore today at a coupon rate of 7.33% through its second Basel III compliant Tier 2 bond issuance for the current financial year. “The bonds are issued for a tenor of 15 years, with call option after 10 years and each anniversary dates thereafter and are rated AAA with stable outlook from CRISIL Ratings Limited and CARE Ratings Limited,” the release notes.

As per the release, the issue garnered an overwhelming response from investors, receiving more than 3 times bids against the base issue size of ₹4,000 crore. The total number of bids received was 77, which saw participation from a diverse set of qualified institutional bidders. The investors were across provident funds, pension funds, mutual funds, banks, etc.

“The wider participation and heterogeneity of bids demonstrated the trust investors place in the country’s largest Bank,” says C S Setty, Chairman, SBI.

Last month, on August 29, SBI informed exchanges that it raised ₹7,500 crore through its first Basel III compliant Tier 2 bond issuance for the current financial year. The bonds were issued for a tenor of 15 years, at a coupon rate of 7.42%, with call option after 10 years and each anniversary dates thereafter.

In June this year, the public sector bank announced that it would raise up to ₹20,000 crore in the current financial year by issuing long-term bonds through a public or private placement.

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