SBI plans to raise Rs 1000 crores ($870 mln) through private placement of debt |
The State Bank of India (SBI) plans to tap the market through a Rs 1000 crores private placement. The bank likely to float a subordinated debt issue of Rs 1,000 crores this week. This said to be the largest tier-II debt issue by any bank in this fiscal. Sources say, the five-year instrument is likely to carry a coupon of around 11 per cent. SBI Capital Markets is set to manage the issue, money market sources said. Crisil rated the issue as "AAA".
"The bank anticipates a growth in loans assets in the next financial year. Raising Tier-II funds at this juncture will allow the bank to maintain its capital adequacy ratio (CAR) at the current levels," the bank sources said.
The Capital Adequacy Ratio (CAR) of the bank is pegged at 12.51 per cent at present. Of which, Tier-I capital constitutes 9.36 per cent and Tier-II capital the balance 3.15 per cent. The bank floated a 10-year Rs 1000 crores subordinated debt issue in 1995.
"At around 11 per cent, the SBI paper is finely priced. Had the bank opted for the book-building route for pricing the bond, the coupon would have been on the higher side, given the likely tightness in the system this week," an analyst said.
The timing of the bond issue coincides the following tighter liquidity conditions from Rs 7,000 crores towards advance tax outflows. The yield is currently being dealt at 11.10 per cent, about 20 basis points lower than the levels prevailing the previous week.
Source : MI
Mar 20, 2000