State Bank of India (SBI) has postponed plans to raise Rs 500 crore through a retail issue of non-convertible debentures to the next financial year even as L&T Finance is set to do the exact opposite.
SBI chief financial officer S S Ranjan confirmed the deferral to DNA Money. A merchant banker said SBI was planning this as a capital-raising exercise and not a fund-raising exercise.
“They already have a capital adequacy ratio of 14%. Now in the absence of credit offtake they will not be going ahead with the retail issue this fiscal,” he said. The bond may now be floated after June, sources said.
Meanwhile, L&T Finance has launched an issue of 3-year, secured non-convertible debentures for Rs 250 crore with a greenshoe option of Rs 250 crore. The offer is open February 9-22.
The bonds offer two coupons — 8.5% payable annually, and 8.4%payable semi-annually. Proceeds will be used for loan disbursements, the company said.
The arrangers to the issue are JM Financial, Citigroup Global Markets India and Kotak Mahindra Capital.In August-September last year, L&T Finance and Shriram Transport Finance —- along with Tata Capital in February —- raised about Rs 3,500 crore through non-convertible debentures. All the three debt floats saw super oversubscription.
“The last NCD issue was encouraging for us. So we thought of going for a second issue,” said N Sivaraman. The last issue was worth Rs 1,000 crore.
Last month SBI had announced plans to raise the amount as Tier II capital. It was decided that the capital would be a part of the Rs 5,000 crore the bank plans to raise in January. Tier II capital is raised by issuing bonds with maturity between 2 years and over 15 years.
SBI chairman O P Bhatt had said on the sidelines of the bank’s quarterly results press conference in January that the bank will need a capital infusion of Rs 10,000 crores in the next fiscal year.
With inputs from Parnika Sokhi
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