SBI: SBI plans to raise $750 million via overseas bond issues

Mumbai: State Bank of India, which owns nearly a fifth of the country’s outstanding banking-sector credit, is tapping the overseas markets again to raise up to $750 million through bond sales being arranged by JP Morgan, BoFA Securities, Standard Chartered Bank and HSBC, two banking industry sources told ET.

The bond sale, part of the broader capital-enhancement exercise at the country’s most-valued government asset, could open as early as next week, coinciding with the start of the two-month-long autumnal festive season during which demand for retail credit is the highest in Asia’s third-biggest economy.

The bonds will be benchmarked against 5-year US treasury bonds and likely to be priced at a spread of 140-145 basis points over the benchmark, the first source said. The bond will have a tenor of 5 years.

An SBI spokesperson did not respond to the query while officials at JP Morgan, BoFA Securities, Standard Chartered Bank and HSBC could not be immediately reached for comment.

SBI is raising this fund under the $10-billion medium term note programme and the proceeds will be used for lending and other debt purposes, one of the sources said.

“SBI has appointed four foreign banks to raise around $500 million – $750 million through the issuance of US dollar-denominated bonds,” said the source. “The bond will be priced in line with the existing bond price.”

Earlier this year, the bank took board approval to raise $2 billion in foreign currency bonds. Of this, in April SBI had raised $750 million through 5-year Regulation S (Reg S) bonds at a coupon of 4.875%. Prior to that in February, SBI raised a syndicated social loan of $1 billion, marking the first time that SBI raised a social loan.SBI has $600 million of bonds maturing this month and $800 million worth of instruments maturing early 2024.

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