State Bank of India (SBI), the country's largest lender, has raised Rs 10,000 crore at a rate of 7.36 percent through 15-year infrastructure bonds, according to a statement issued on Wednesday. This is SBI's sixth infrastructure bond offering. With this recent offering, the bank's total outstanding long-term bond portfolio currently stands at Rs 59,718 crore.
The issue received bids in excess of Rs 18,145 crore and was oversubscribed by approximately 3.6 times the base issue size of Rs 5,000 crore, according to the bank. The issue also received approximately 120 bids from investors such as provident funds, pension funds, insurance companies, mutual funds, and corporates.
State Bank of India
Dinesh Khara, Chairman of SBI, stated that the offering will promote the development of a long-term bond curve and encourage other banks to issue bonds with longer maturities. Money raised through infrastructure bonds benefits banks since it is exempt from regulatory reserve requirements such as the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). Unlike funds collected through deposits, which require banks to hold 4.5 percent of the amount as CRR with the Reserve Bank of India (RBI) and invest around 18 percent in securities to meet SLR commitments, infrastructure bond proceeds can be fully deployed for lending. Several other state-owned lenders, including Canara Bank and Bank of India, intend to raise capital through infrastructure bonds.
Meanwhile, another private sector lender, Bank of Baroda (BoB), intends to raise cash through a USD issuance. The BoB has opted to issue $500 million in standalone REG S bonds as part of a $4 billion medium-term note (MTN) programme. The bank is seeking applications for joint lead managers for the anticipated international USD bond offering.
Previously, in January, SBI raised $600 million by offering a five-year paper to a group of global investors as part of its $10 billion medium-term note programme. Following that, a number of non-banking finance companies (NBFCs), including Shriram Finance, Muthoot Finance, Manappuram Finance, and Sammaan Capital (formerly Indiabulls Housing Finance), raised funds using USD bonds.
