SBI To Raise Rs 3,300 Crore Via Additional Tier-1 Bonds

SBI to raise Rs 3,300 Crore via additional Tier-1 Bonds
Bank at a coupon of 9%.
State Bank of India (SBI),

the country's biggest
lender, is planning to raise
up to Rs.3,300 cr through
additional tier-1 or AT1
bonds to shore up capital
adequacy. This is the 2nd
time in recent months that
the SBI is looking to raise
funds via this route. In the
month of September, it
had issued AT1 bonds
worth Rs.2,100 cr to YES
CRISIL assigns AA+ for SBI Bonds:

CRISIL has assigned AA+ for these bonds. For arriving at the ratings, it has
combined the business and financial risk profiles of the bank and its subsidiaries,
including the associate banks, collectively termed as the SBI group. This is due to the
associate banks and subsidiaries being an integral part of SBI's growth strategy. As
per a senior executive of State Bank of India (SBI), the rates on long-term paper
have softened since the beginning of September. They want to be ready to take the
benefit of falling yields, he added.
The yield on 5-year government paper has declined from 7.02% in early September
to 6.71%; for 10-year paper, it has seen a dip from 7.12% level to 6.73% now.
CRISIL's ratings on the banks debt instruments not only factor in the SBI group's
dominant market position in the Indian banking sector, adequate capitalization,
strong resource profile, and profitability but also in the continued strong support
the bank is expected to receive from its majority owner, the Indian government,
both on an ongoing basis and in the time of distress.
SBI floated Nations very first AT1 Bonds in the ides of September:
In mid-September, SBI also floated Indias first overseas AT1 bond offering and
raised 300 million dollars. Albeit it pruned issue size from 500 million dollars to 300
million dollars on its tight pricing stance, the State Bank of India fixed the coupon at
5.5%. The price for this issue is estimated to become the benchmark for other banks
of the country planning similar overseas bond offering.
SBIs Capital Adequacy Ratio (CAR) and Common Equity Tier-1 (CET-1):
SBI's CAR - capital adequacy ratio was 14.01% in June 2016, as against 12% a year
ago. CET-1 or Common equity tier-1 was 10.71% in June this year, as against 9.59%
last year.
SBI's capital adequacy ratio (CAR) improved substantially in the first quarter of
FY17 because of gains from revaluation of real estate assets. It boosted Common
equity tier-1 (CET-1) by Rs.14,383 cr (72 bps).
Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal
views of the research team. Users are advised to use the data for the purpose of information and rely on their own
judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment
Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of
MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange
authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and
based on their observations have issued advise letters or levied minor penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/
Research Analyst/ his Relative:
Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or
other benefits from the subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company
Article Written by
Salman Hashmi

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SBI to raise Rs 3,300 Crore via additional Tier-1 Bonds

Bank at a coupon of 9%.

State Bank of India (SBI),

CRISIL assigns AA+ for SBI Bonds:

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