On Monday, India’s largest lender State Bank of India (SBI) had raised Rs 4,000 crore in perpetual bonds at a record-low coupon, which gives a sign that investors are still willing to invest in these securities again, after the Yes Bank episode.

The capital raised by SBI through Additional Tier-1 (AT1) bonds is at a coupon rate of 7.74%. The bank has issued these unsecured, perpetual, high-risk bonds to shore up their capital base for meeting the Basel III norms. If the capital ratios on these bonds fall below the threshold levels, the bank can skip paying interest on it and, The Reserve Bank of India (RBI) can also ask the bank to cancel their outstanding AT1 bonds without consulting the investors of the bank.

Last month, Bank of Baroda issued their AT1 bonds at a coupon rate of 8.25% and raised Rs 764 crore. The bonds issued were put on a call option after five years from the date of issuance and each year thereafter. In a 26 August report, rating agency Crisil Ltd. noted that the key monitor for the bank’s asset quality is its post moratorium credit behaviour of its borrowers.

In the March quarter, Yes Bank had raised Rs. 8,415 crore through its AT1 bond and after that, many direct and indirect bondholders had filed a case against the mis-selling of bonds in Bombay High Court.