May 28, 2024

SBI raises Rs. 97 billion through infrastructure bond

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Mumbai January 27, 2023: State Bank of India (SBI), the country’s largest lender, has raised Rs. 9,718 crores (Rs. 97 billion) through its second infrastructure bond issuance on Wednesday at a coupon rate of 7.70%. The fund proceeds will be utilized in enhancing long-term resources for funding infrastructure and the affordable housing segment. The tenor of these bonds is 15 years. The issue attracted an overwhelming response from investors with bids of Rs. 14,805 crores and was oversubscribed by ~2.96X against the base issue. The total number of bids received was 118 indicating wider participation. The investors were across mutual funds, provident & pension funds, and insurance companies.

Based on the response, the Bank has decided to accept Rs. 9,718 crores at a coupon rate of 7.70% payable annually for a tenor of 15 years. This represents a spread of 17bps over the corresponding FBIL G-Sec par curve. Before this, the Bank had raised infrastructure bonds of Rs. 10,000 crores on December 06, 2022, at a spread of 17bps over the corresponding FBIL G-Sec par curve. The Bank has an AAA credit rating from domestic credit rating agencies for these instruments.

This issuance is very significant considering this is the first time an Indian bank is issuing a 15 years long-term infrastructure bond helping the bank in long-term lending to the infrastructure segment. We believe this issue will help develop a long-term infra-bond curve and encourage banks to issue for longer tenors.