SBI seeks bids to raise AT1 bonds as yields drop
SINGAPORE, Aug 27 (IFR) - State Bank of India is seeking bids to raise up to Rs35bn (US$487m) from Basel III-compliant Additional Tier 1 bonds in the domestic market as yields have dropped on the government's announcement of measures to boost the economy, according to market sources.
The AT1 notes have a call option at the end of five years and every year thereafter. The state-owned bank has asked investors to place bids on the BSE's electronic bidding platform on August 28 from 11:00am to 12:00pm India time.
It is eyeing Rs15bn, plus a greenshoe option of Rs20bn from the bond issue.
Bond yields have been sliding since Friday after the finance ministry announced measures to help the economy and deepen bond markets, and are expected to fall further after the central bank approved the transfer of a much higher-than-expected dividend of Rs1.76trn (US$24.62bn) to the government. The dividend will allow Prime Minister Narendra Modi’s government to provide additional fiscal stimulus to the ailing economy while meeting the fiscal deficit target.
The yield on India's 10-year AAA PSU benchmark has eased 12 basis points to 7.45% since Friday, according to Refinitiv data.
The AT1 notes are rated AA+ by Crisil and Icra. SBI Capital Markets is the arranger for the bond issue.
In July, SBI received board approval to raise up to Rs70bn from perpetual bonds in rupee or any other convertible currency such as offshore rupee (Masala) or US dollars through a public offering or private placement to overseas and Indian investors.
On June 29, it raised Rs50bn from 10-year non-call five Basel III-compliant Tier 2 bonds at 7.99%.
SBI is yet to make an official announcement on the planned bond sale.
(Reporting by Krishna Merchant; Editing by David Holland)
((Krishna.Merchant@thomsonreuters.com; +65 64174544;))