SBI to come out with Rs 1,000 cr retail bonds in Jan

"We are planning for (retail bond issue) January. It would be in the range of Rs 500-1,000 crore," SBI Chief Financial Officer S S Rajan said. The first retail bond issue of Rs 1,000 crore last month was subscribed over 17 times on the opening day itself. The bank had to curtail the subscription period as the response to the bonds was beyond anticipation.

The offering comprised issue of bonds worth Rs 500 crore, with an option to raise it further up to Rs 500 crore by issuing additional bonds. The bonds issued in two variants -- Series 1 and Series 2 having maturity of 10 years and 15 years respectively, with a face value of Rs 10,000 each. The bonds offers an interest of 9.25 per cent for 10 years and 9.5 per cent for 15 years.

The bonds are listed on the National Stock Exchange of India (NSE). The proceeds would be utilised to augment bank's capital base in line with its growth strategy. SBI Chairman O P Bhatt had already said that the bank is likely to offer many more retail bond issues every quarter.

"Going forward, we intend to do more bond issues. We want to create a secondary market for these issues, so that exit becomes easy and price discovery takes place," Bhatt had said, adding "over a period of time this will help us build a bigger corpus of long term resources." "We believe that at present the investment opportunities for investors are very limited, which needs to be increased. This bond issue will fulfill the need to a considerable extent," Bhatt had said.

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