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Tuesday, March 1, 2011

Retail laps up SBI bond issue 4.5x

Retail investors have lapped up the Rs. 1,000-crore State Bank of India bond issue 4.5 times taking the overall subscription to a full 8.5 times.

Sources at Kotak Mahindra Bank, one of the merchant bankers to the issue, said that the bank has received subscriptions for Rs. 8,580 crore or more than 8.5 times the minimum on offer. The issue, which opened for subscription on February 21 closed yesterday.

"Retail investors have put in bids for Rs. 4,500 crore, against the minimum Rs. 500 crore on the offer, while the qualified institutional investors have bid for Rs. 3,500 crore compared to the minimum offer of Rs. 250 crore, and those from the high networth individual touched a little over Rs. 500 crore, which is double the offer," said the sources who could not be identified.

"These are provisional figures as there are some more applications from the remote areas to be accounted for," the source added.

This issue is part of the Rs. 10,000-crore retail bond programme SBI has planned for FY11 through FY12. Already the bank had raised Rs. 1,000 crore 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.

In the regulatory filing, the bank had said that it would keep the option of retaining the entire retail subscription or up to Rs. 10,000 crore. Accordingly, if the bank exercises this option, the total money raised from the issue would touch Rs. 6,500 crore, against Rs. 2,000 crore planned with a greenshoe option.

The bank had aimed to raise Rs. 1,000 crore with a greenshoe option for an equal amount. The bank is raising the money to meet its assets growth. Credit demand expanded 23 percent in January. The bank was also planning to raise Rs. 20,000 crore from a rights issue this fiscal. But it looks unlikely pending the government approval for the issue.

The bank is offering 9.75 per cent 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 to retail investors and 9.45 per cent to non-retail investors. These bonds have call option in the 10th year.

Source: Financial Express


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