State Bank of India intends to borrow up to $1.25 billion, making it the biggest dollar-denominated loan from the nation's financial sector this year.
According to reports, CTBC Bank, HSBC Holdings Plc, and Taipei Fubon Bank are negotiating the five year loan, which has an interest margin of 92.5 basis points over the risk-free Secured Overnight Financing Rate.
Through its branch at Gujarat International Finance Tec-City, the nation's newest financial center, India's leading lender is raising the facility for general corporate purposes, according to the sources.
This year, State Bank is one of numerous local borrowers that have increased their foreign currency debt. In the face of tighter domestic rules, non-banking financial companies also known as "shadow banks" have increasingly turned to dollar-denominated facilities.
The most recent non-banking financing company in India to apply for a $300 million syndicated term credit is Cholamandalam Investment & financing Co. Bank of Baroda is raising a $750 million loan, and the Sydney branch of the local financier Union Bank of India is marketing a three-year loan worth A$125 million (or $81 million).
Despite the rush of activity, Bloomberg's data shows that the lack of significant firm borrowings has caused India's dollar loan volume to drop 27% to $14.2 billion this year.
According to data published by Bloomberg, State Bank raised a three-year loan of $750 million in July.
