SBI Issues Perpetual Bonds to YES Bank

2019 ias preliminary exam test series

State Bank of India has raised Rs 2,100 crore by allotting Basel III compliant perpetual bonds to Yes Bank.

This is part of the bank’s Rs 11,100-crore fund raising plans that it intends to raise on a private placement basis by issuing debt instruments.

SBI has issued and allotted 21,000 AT1 Basel III compliant debentures of face value of Rs 10 lakh each at par through private placement bearing coupon rate of 9 percent per annum with call option after five years or any coupon payment date thereafter aggregating to Rs 2,100 crore in first tranche, to Yes Bank.

These are additional tier I (AT1) non-convertible, perpetual, subordinated, unsecured debt instruments in form of debentures.

Perpetual bonds carry no maturity date, so they may be treated as equity, not as debt.

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