State Bank of India today hit the international bond market to raise about $1 billion (Rs 5,430 crore) in a five-year dollar-bond sale programme.
"The State Bank today hit the overseas bond market with a benchmark issue ($500 million or above). The initial pricing of the fixed rate, five-year senior unsecured bond is fixed at US treasury plus 275 basis points," a merchant banker involved in the deal told PTI late this evening.
SBI chairman Pratip Chaudhuri confirmed the sale programme and said they should be able to close the issue by late tonight.
However, Chaudhuri did not put a size to the issue. The merchant banker also said the bonds, which are being sold to raise $1 billion, are being offloaded through SBI's London branch and will be listed on Singapore Stock Exchange. He further said the issue is being sold globally and the bank has run extensive road shows in all the major financial centres like hong Kong, Singapore, London, Frankfurt, New York among others.
The current issue carries a Baa2 rating from Moody's and BBB- by Standard & Poor's. The issue is being managed by four merchant bankers. This ongoing issue 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 per cent 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 per cent. 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.
So far this year, domestic companies like Reliance Industries, Bharti Airtel, ICICI Bank, HDFC Bank, Exim Bank, PowerGrid, and Tata Communications among others, have raised a whopping $6.5 billion, which is 65 per cent of what India Inc mopped in the entire previous year.