SBI Bonds 2011: Review Analysis & Details for investment in SBI Bonds: Finance Trading Times

SBI Bonds 2011: Review Analysis & Details for investment in SBI Bonds

It is being termed as a once-in-a-lifetime offer for safe investments - yes, the SBI Bonds or State Bank of India Bonds are here and the period of subscription is now open.
And why not, the offer is from an institute which has shown consistent profitable performance for more than 100 years. Coming from such institution, these bonds have the backing of the government as the bank is a public sector bank. These bonds will also offer a high rate of return which makes them more attractive. This article, provides review, analysis, details, expert opinion and risk factors of investments in SBI Bonds 2011

SBI Bonds 2011: Review Analysis & Details for investment in SBI Bonds

Let's start with some basic details first:
What are the subscription or application dates for the SBI Bonds 2011? SBI Bonds
The application period or subscription period for SBI Bonds 2011 is open on 21st February and will close on 28th February 2011.

Will the SBI Bonds be available only in demat form?
Yes. The bonds will only be available in demat form. So investors who are still with the pen-and-paper format cannot apply for these bonds. And this has caused a major problem. Due to the nature of these bonds issued only in demat form, the applications for subscription to these SBI bonds are limited to only 126 branches of SBI bank across the country. This has a major setback for small investors from small towns where the SBI branches are not equipped to handled demat applications. Ultimately, many common and small investors will miss out on this issue.
Interestingly, although demat account it mandatory for investing in SBI bonds, one has to submit paper based applications at the designated 126 branches. That means, even if a person sitting in a small town in Maharashtra has a demat account, he can only apply for these SBI bonds by travelling to the nearest SBI Bonds application collection branch (there are 7 in Mumbai) and then get to apply for these bonds.
This is going to be a major bottleneck for investments in these SBI Bonds.

What are the different options available for investing in SBI Bonds 2011?
There are 2 options for investments:
1) 10-year SBI Bond at 9.75% - Series 3
2) 15-year SBI Bond at 9.95% - Series 4

with call options on both the above types of SBI bonds.

Is there any reservation of allocation for SBI Bonds as per the investor category?
Yes, 50% of the issue is for retail investors, rest is split between HNI and investment institutions.
There is also a green shoe option of Rs 10,000 crore and that is only for retail category.

Which exchanges will trade these SBI Bonds?
Both NSE and BSE will trade the SBI bonds

Lead Managers to SBI Bonds?
Citigroup, Kotak SBI Capital market are the lead managers to the issue. Datamatics financial services are the registrar.

Any tax benefit available from SBI Bonds?
Please note that these SBI bonds dont offer any tax savings or tax benefits

Final Thoughts about the SBI Bonds?
The SBI Bonds are one of the safest options available in the Indian Debt Market. The bank itself is owned by Government of India and has been a profitable organization since more than 100 years consistently. That takes away the risk part of these bonds, which have been rated "CARE AAA" by CARE rating agency, which indicate these bonds as a safe investment.
Offering an attractive rate of return almost 10% is something which is another benefit for investor. Overall recommendation is that investors must apply for these debt instruments from the safest organizations in India.
The only bottleneck is the paper based application procedure at very few selected branches across the country and the first-come-first-serve allotment method, which does not guarantee sure shot allotment for each application.
Although there are unconfimred news - but that too is a healthy sign for investors - that these SBI bonds are trading at a big premium of upto Rs. 320 per bond in the grey market. Taking the face value of these bonds at 10,000, that is 3.2% already. Investors who are looking for a safe investments and can apply for these bonds conveniently, are highly recommended for investment
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