SBI raises $1 billion via bond sale 

This is the third bond sale by SBI in the past two years 

 

At 3.75% over the US treasury bills, the SBI issue was the cheapest-ever by a domestic company till date with the effective coupon rate, payable half-yearly, working out to be just 4.125%. Photo: Pradeep Gaur/Mint 

 

                  Mumbai: State Bank of India (SBI) has mopped up one billion dollars in an international bond sale programme, according to one of the merchant bankers Citigroup Inc.

“SBI successfully sold its five-year senior unsecured bond (REG S)at 255 bps over the US treasury yielding a coupon of 325 base per annum raising one billion dollars through its London branch. The issue was closed late last night,” Citigroup said on Friday.

SBI could not be contacted for comments, though chairman Pratip Chaudhuri on Thursday had confirmed that the issue was to be closed late last night. At 325 base, this could be the tightest money raised by a domestic entity in a foreign market. The merchant banker also said the fixed bonds, which were sold to raise one billion dollars, will be listed on the Singapore Stock Exchange and has a Baa2 rating from Moody’s and BBB- by Standard and Poor’s. This is the third bond sale by SBI in the past two years, with the latest being the $1.25 billion it had raised in a 10-year issue last July. That issue was the largest-ever from a domestic bank and also the cheapest five year-issue by a domestic issuer.

At 3.75% over the US treasury bills, the SBI issue was the cheapest-ever by a domestic company till date with the effective coupon rate, payable half-yearly, working out to be just 4.125%. SBI had mopped up another $1 billion in July 2010 also. The bank has a board mandate to raise $10 billion from overseas over the next few years, and it has a headroom to raise nearly $6 billion more, including the current issuance, since it had raised nearly $4 billion till last year.

With the SBI issue, so far this year, domestic companies like Reliance Industries Ltd, Bharti Airtel Ltd, ICICI Bank Ltd, HDFC Bank Ltd, Exim Bank, Power Grid Corp. of India, and Tata Communications Ltd, among others, have raised a whopping $7.5 billion, which is 75% of what was mopped in the entire previous year.

 

TOUHID HUSSAIN

PGDM 2nd SEM