State Bank of India board approves raising up to $2 billion via long term debt

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Public sector lender State Bank of India (SBI) in its Executive Committee of the Central Board on Tuesday approved to examine the status and decide on long term fund-raising in single or multiple trenches up to US $2 Billion.

SBI said that the fund raising of up to $2 billion would be done in single or multiple trenches through a public offer or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2023-24.

“Executive Committee of the Central Board in its meeting 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 its regulatory filing.

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Last month, SBI raised ₹3,717 crore through its third Basel III compliant Additional Tier 1 bond issuance for FY23, at a coupon rate of 8.25%. The tenor of these bonds is perpetual with a call option after 10 years and every anniversary thereafter.

However, the AT1 issue attracted an overwhelming response from investors with bids of ₹4,537 crore and was oversubscribed by about 2.27 times — against the base issue of ₹2,000 crore. The investors were across provident & pension funds & insurance companies. Based on the response, SBI decided to accept ₹3,717 crore at a coupon rate of 8.25% which is payable annually.

SBI plans to utilise the proceeds from these bonds for augmenting Additional Tier 1 Capital and the overall capital base of the bank and for strengthening capital adequacy in accordance with RBI guidelines.

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