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Mumbai: On Wednesday, India’s largest lender, State Bank of India (SBI), issued 4,000 rupees through additional Tier 1 bonds at a coupon rate of 7.72%, the first issue in the domestic market following the Securities and Exchange Commission. He said he had procured it. India has issued a new rule.
In a press release, SBI said it had received bids in excess of Rs 10,000 for a base issue size of Rs 1,000.
AT1 bonds, also known as perpetual bonds, do not have a maturity date, but they do have a call option. Issuers of such bonds can call or redeem the bonds, especially if they are making money at a lower rate, especially when interest rates are falling.
SBI has a AAA credit rating from a local credit institution, but the AT1 offering is rated AA +. This is the highest domestic rating for such products, given their hybrid and risky nature.
SBI was the first lender to raise funds through offshore AT1 bonds in 2016. The latest issuance by banks has led other lenders, such as Axis Bank, to consider issuing offshore AT1 bonds and raise $ 1 billion in funding. Axis Bank uses the proceeds for green and social projects. Banks have set an initial price guidance for bonds at 4.4%.
Axis Bank is the second Indian lender of the year to use the foreign bond market to raise money through AT1 bonds. HDFC Bank recently raised $ 1 billion.
In March of this year, SEBI amended the 100-year valuation rules for perpetual bonds. He said the remaining maturity of Basel III additional Tier 1 (AT-1) bonds would be considered to be 10 years until March 31, 2022, with the maturity extended to 20 and 30 years over the next 6 months. From April 2023, the remaining term of AT-1 bonds will be 100 years from the date of issue. Remaining maturity is the holding time until maturity of a bond.
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