SBI to raise at least $1 billion via overseas bonds


Mumbai: The country’s largest lender State Bank of IndiaNSE 0.50 % (SBI) is raising at least $1 billion by selling bonds to overseas investors in what is the largest such sale from the country since January 2018.

The state owned lender is issuing the bonds in two tranches, one a three year and another a five year as its seeks to shore up funds in the new year, two people familiar with the deal said. The proceeds could go beyond $1 billion if demand is strong.

“The sale was launched early this morning India time and we plan to tap investors across the globe including the US,” said one of the persons cited above.

Bankers have indicated a target yield of 190 basis points above the three year US treasury for the three year bond. The three year US treasury is trading at around 2.52% which means the bond may price at 4.42% of lower.

One basis point is 0.01 percentage point.

The range for the five year bond is 210 basis points above the five year US treasury which is trading at around 2.53% which means that the bond may price at around 4.63%.

“The bank plans to use these funds for lending overseas. They want to raise big money at the start of the year so that they have enough for the first half just in case markets become volatile later,” said the person cited above.

If sucessful this bond could set the benchmark for other issues out of the country after a dull 2018 when dollar bond issues from India were stuck as US rates increased and the rupee was volatile.

Eight foreign banks led by Barclays, HSBC and Bank of America-Merrill Lynch are helping the bank raise these funds