State Bank Of India To Issue AT-1 Bonds, Tier-2 Bonds, & Infrastructure Bonds To Raise Funds

Nation's largest lender, State Bank Of India intends to raise funds by issuing a combination of Additional Tier-1 (AT-1) bonds, tier-2 bonds, and infrastructure bonds as per The Economic Times report.

SBI has started making investor calls to raise up to $1 billion in senior unsecured US dollar bonds of five-year maturities after it received the board's approval this month to garner $2 billion in overseas debt issuances this fiscal.

The bank will raise up to $2 billion through foreign currency bonds in single or multiple tranches, the lender said in a stock exchange filing.

"The Executive Committee of the Central Board in its meeting held on 18th April 2023 has approved, inter alia, the following: "To examine the status and decide on long term fund raising in single/multiple tranches up to US$ 2 Billion (US$ Two Billion) under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2023-24"," said SBI in an exchange filing.

As per the report, discussions are likely to start around May and by the end of the first quarter, the lender may finalise how much capital it would raise initially though. It is expected that the bond would be priced around 145-150 basis points above the US 5-year treasury rates, sold through six lead managers that include JPMorgan and HSBC.

The SBI will come out with all three types - AT-1 bonds, infrastructure bonds, and tier-2 bonds, the report said citing sources. "The issuances will be healthy, based on the initial assessments of credit growth and demand."