Thursday, March 3, 2011

SBI Bonds Issue: 2011

SBI said it plans to retain a portion of the retail over-subscription to its tax-saving bonds issue, which will take the total amount raised through the mega issue up to Rs 5,500 crore. 

"We will retain up to may be Rs 5,500 crore... The rest we will return," Bank Chairman O P Bhatt told reporters on the sidelines of an IBA conference here today. 

As against an allocated Rs 1,000 crore, subscription by retail investors stood at Rs 4,500 crore, while an additional subscription of nearly Rs 4,000 crore came from other investors, including high net-worth individuals. 

"Our terms of issue are such that in the retail segment, we could take as much as we want up to Rs 10,000 crore, while from other investors we can take up to Rs 1,000 crore," Bhatt explained. 

The issue, which had opened on February 21, closed yesterday. Investors were attracted to the issue because of its competitive coupon rate and the timing, as the end of the fiscal is usually when individuals do tax-saving investments. 

This issue is part of the Rs 10,000 crore retail bond programme SBI has planned for FY'11 through FY'12. The bank had raised Rs 1,000 crore through in the first tranche of the issue last October, which was oversubscribed 19 times. That was the first retail bond offering in the country by a corporate entity. 

The bank is offering a 9.75 per cent coupon rate to retail investors on the 10-year bonds and 9.3 per cent for non-retail applicants. These bonds carry a call option in the fifth year. 

For the 15-year bonds, the coupon is 9.95 per cent for retail investors and 9.45 per cent for non-retail investors. These bonds have a call option in the tenth year.

Posted via email from Ranjan's posterous

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