The Hindu Business Line : SBI rights issue bonds yield at 8.35%

Mumbai, March 27 The special bonds issued by the government of India to subscribe to the rights issue of State Bank of India, will have a maturity of 16-years and a yield of 8.35 per cent per annum, the Reserve Bank of India said in a press release issued today.

The government issued the 2024 bonds for a total amount of Rs 9,996 crore.

In a note issued today, the RBI said that the special bonds are being issued at par to State Bank of India, as subscription towards the rights issue of equity shares of SBI.

The investment in the special bonds by banks and insurance companies will not be eligible for statutory liquidity requirement, said the RBI note.

Such investment by insurance companies will, however, be eligible as investment under “other Approved securities” category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000.

Further, the investment by the provident funds, gratuity funds, superannuation funds, etc., in the special bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance.

Special bonds will be transferable and eligible for market ready forward transactions (Repo). The bonds, however, will not be an eligible underlying security for ready forward transactions (Repo/Reverse Repo) with the Reserve Bank of India.

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