Monday, June 24, 2024

SBI to consider $2 billion fundraising in FY24 via senior unsecured notes, board to meet on 18 Apr

The largest public sector lender in the country, State Bank of India (SBI) on Monday announced its plan to raise up to $2 billion for the financial year FY24 through the issuance of senior unsecured notes. To discuss and consider the same, the lender’s board members are scheduled to meet on April 18.

The senior unsecured notes will be in US dollars or any other convertible foreign currency. Also, the board will consider whether to issue these notes through a public offer and or private placement.

In its regulatory filing, SBI said, “The Executive Committee of the Central Board is scheduled to have a meeting on 18th April 2023.”

It added, the board is meeting to “examine the status and decide on long-term fundraising in single/multiple tranches of up to $ 2 billion…, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible foreign currency during the Financial Year 2023-24.”

On BSE, SBI’s share price finished at 526.30 apiece marginally lower from the previous closing of 527.95 apiece. SBI is among the top 10 most valued firms. As of April 10, 2023, the bank’s market cap is around nearly 4.7 lakh crore.

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.

SBI is yet to announce the date of its Q4 results. However, the bank is expected to see healthy growth in the fourth quarter of FY23.

In Q4FY23, as per Axis Securities preview note, SBI is expected to record strong Advances growth of ~16/5% YoY/QoQ along with a marginal uptick (of ~5-7bps) in NIMs to support NII growth. Further, PPOP growth is likely to remain healthy and supported by flattish opex ratios. Also, the bank’s credit costs are seen to remain stable sequentially thus aiding the bottom-line.

The brokerage does not expect any chunky slippages in Q4 and asset quality will continue to improve.


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