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Mumbai: The State Bank of India (SBI) has raised an additional Tier 1 (AT1) bond of Rs 4,000 and offers a coupon rate of 7.72%. This is just around the corner from HDFC Bank, which raises $ 1 billion through the issuance of AT1 bonds in the international market.
Meanwhile, Axis Bank is already using the international market to raise AT1 bonds. Several other public sector banks are considering issuing bonds in both domestic and international markets in response to recent issues. According to bankers, AT1 bonds offer higher rates of return and yields are very low in the bond market, which is attracting new interest.
Public sector bonds are considered low-risk investments because they are owned by the government. SBI bonds received bids in excess of Rs 10,000. This is almost 10 times the basic size of 1,000 rupees. “Based on the response, the bank decided to accept 4,000 rupees with a 7.72% coupon,” said the country’s largest bank.
These bonds have higher returns than traditional bonds because AT1 is risky and is considered an equity-like product. SBI’s pricing is the lowest price ever offered for such debt issued by an Indian bank since the Basel III capital rules came into force in 2013, the bank said. ..
The bank has a AAA credit rating from a local credit institution, but the AT1 offer is rated AA +. This is the highest domestic rating for these products given their hybrid and risky nature.
Meanwhile, Axis Bank is already using the international market to raise AT1 bonds. Several other public sector banks are considering issuing bonds in both domestic and international markets in response to recent issues. According to bankers, AT1 bonds offer higher rates of return and yields are very low in the bond market, which is attracting new interest.
Public sector bonds are considered low-risk investments because they are owned by the government. SBI bonds received bids in excess of Rs 10,000. This is almost 10 times the basic size of 1,000 rupees. “Based on the response, the bank decided to accept 4,000 rupees with a 7.72% coupon,” said the country’s largest bank.
These bonds have higher returns than traditional bonds because AT1 is risky and is considered an equity-like product. SBI’s pricing is the lowest price ever offered for such debt issued by an Indian bank since the Basel III capital rules came into force in 2013, the bank said. ..
The bank has a AAA credit rating from a local credit institution, but the AT1 offer is rated AA +. This is the highest domestic rating for these products given their hybrid and risky nature.
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