Linklaters advises on India’s first offshore Additional Tier 1 Notes

Linklaters has advised on the State Bank of India’s US$300m issuance of 5.5% Additional Tier 1 Perpetual Notes, the first offshore Basel III-compliant issue for an Indian bank. The SBI used its Dubai International Financial Centre Branch to issue the perpetual notes under its US$10bn MTN Programme. Linklaters acted for the joint lead managers, BAML, Citi, HSBC, J.P. Morgan, National Bank of Abu Dhabi, SBI Capital Markets and Standard Chartered Bank.

The Reserve Bank of India has been encouraging sales of AT1 bonds, often referred to as contingent convertibles or ‘coco’ bonds, to help the banks comply with Basel III capital standards by the 2019 deadline. The SBI Notes provide for a temporary write down if the bank’s capital breaches pre-agreed levels. They can also be written off permanently if the RBI deems that SBI would become unviable without either an injection of public funds or a permanent write-off of the Notes.

Jon Horan, Capital Markets partner at Linklaters, commented: “As this is the first international issuance of AT1 securities by an Indian bank it will set the benchmark for other Indian banks to follow. With the 2019 deadline approaching, it is an area that we expect to continue to develop.”

Jon added “The SBI transaction follows Linklaters’ strong involvement in the developing regulatory capital market across Asia, including recent regulatory capital fundraising for all of the Chinese banks that have come to market, including BOC, BOCOM and ICBC, and also for the Bank of East Asia (Hong Kong), DBS Group Holdings (Singapore) and United Overseas Bank (Singapore).”

The Linklaters team was led by Capital Markets partner Jon Horan and included managing associates Taiki Ki and Manoj Tulsiani.

For further information please contact Surinder Sian on +44 207 456 4842.