State Bank of India (SBI) and the National Bank for Agriculture and Rural Development (Nabard) will raise Rs 14,500 crore through bonds on Friday.
SBI will raise up to Rs 7,500 crore through 10-year Tier 2 bonds, which include the base issue of Rs 5,000 crore and a green-shoe option of Rs 2,500 crore. The bonds will carry a five-year call option, a source said. The bank is expected to offer a coupon rate of 6.90–6.95% for the sale. SBI Capital Markets is arranging the issue.
This would be the first major bond issuance by a bank in the current financial year. Banks stayed away from the bond market because of ample liquidity and muted credit growth.
Nabard will likely raise up to Rs 7,000 crore through a bond, maturing in 39 months.
These issuances are likely to encourage other players to follow suit, said market participants.