The money may help SBI in its effort to boost overseas presence
The country’s largest lender, State Bank of India (SBI), today raised $750 million (around Rs 3,500 crore) in the overseas market through five-year bonds as part of its medium-term note programme (MTN).
The issue was priced at mid-swap plus 90 basis points (bps). Mid-swap is the equivalent of Libor (London Inter-Bank Offered Rate) for longer maturity bonds.
SBI’s $5 billion MTN programme was launched in 2004. It targets investors, including banks, insurance companies, hedge funds and private equities in the global market.
The last such issue by SBI was in April 2008, to raise Rs 467 crore. It was the only issue in the year, after the liquidity crunch pushed spreads to 600 to 700 basis points over Libor for five-year bonds.
The five-year MTN issue was rated BBB- by Fitch. SBI had designed the bond issue through the Reg-S route, which means it can target only non-US clients through the bond issue, to raise a maximum of $1 billion.
Also Read
The money may help SBI in its effort to boost overseas presence. It plans to set up 40 branches overseas, including four in the UK, where operations have grown 40 per cent annually in the last two years, Chairman Om Prakash Bhatt said last month.
The bank had appointed five investment banks — Barclays, JPMorgan, Citi, HSBC and UBS — as lead arrangers.
Axis Bank also has approval from the Reserve Bank of India to raise funds through the MTN route. Banks such as HDFC Bank, ICICI Bank, Bank of Baroda are also firming their plans to tap the foreign bond market.