SBI issues $500bn 5 Yr Bonds at 3.25 Per Cent

January 18, 2017 - 09:58:27 AM

SBISBI has hit the international debt market with a benchmark issue to raise approximately $500 million as part of its $10-billion medium-term notes programme through a five-year dollar money sale. Last September, SBI raised overseas debt by issuing dollar-denominated notes which was worth $300 million and before that in February 2014 it had raised $1.25 billion in another dollar money sale.

So far, the bank has raised $3.5 billion out of its $10 billion medium-term note (MTN) programme, which includes $400 million in perpetual bonds. The bank had also concluded AT1 Basel III-compliant non-convertible, perpetual non-call five-year subordinated, unsecured notes at a coupon 5.5 per cent payable semi-annually under $10 billion Reg S bond programme.

Moody’s has given a ‘Baa3’ rating to the senior unsecured notes, issued under its $10-billion MTN programme. The drawdown is going to be carried out from its London branch, and the bonds will be listed on the Singapore Stock Exchange.

On the other hand, Fitch has also assigned ‘BBB-’ ratings to the programme that involves direct, unsubordinated, unconditional and unsecured obligations of the issuer. The issue will at all times rank side by side among themselves and with all other unsubordinated and unsecured obligations of State Bank. The tenor of the issue is expected to be around five years.

Though the bank is flush with funds following demonetization, the dollar denominated borrowing will permit the bank to meet funding requirement of its international operations, which are spawned all over 37 countries. The bond was priced at a spread of 145 bps over the 5-year US treasury, and will bear fixed interest of 3.25 per cent per annum with interest payable semi-annually in arrears.

The transaction met huge interest from investors across geographies with an order book in excess of USD 1.5 billion across 170 accounts. As per Ms Arundhati Bhattacharya, the response to the bond offering highlighted the strong perception of the bank's credit by the international investor community. Citi Bank, HSBC, BNP Paribas, Bank of America Merrill Lynch, DBS Bank Ltd., MUFG and SBI Capital Markets will be acting as the Joint Lead Managers for the Offering.

State Bank of India is the largest bank in India, having a total asset size of US$353 billion, with 16,288 branches in India, 200 international offices in 37 countries and more than 370 million customer accounts.On 17th Jan, SBI share price settled above 0.06 per cent at Rs. 256.00.

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