SBI's $1-bn bond issue subscribed 4.3 times

The issue was priced at a spread of 255 bps over the 5-year US treasury

State Bank of India's (SBI) $1-billion bond issue got a strong response from global investors, with the issue getting subscribed 4.3 times, investment bankers said.

The country’s largest commercial bank priced the issue at a spread of 255 basis points over the five-year US treasury. The yield was 3.271 per cent a year and the bonds bear fixed annual interest of 3.25 per cent. The notes will mature on April 18, 2018. The issue opened and closed for subscription late last night and got a little over 250 bids. Asset management companies, fund managers, banks, insurance companies, sovereign wealth funds, pension funds and companies from Asia, Europe and America had subscribed.

“SBI is very pleased that the transaction received such success. The strength of the order book and the fine pricing reflects the level of investors’ confidence in the SBI credit,” said Pratip Chaudhuri, chairman.

Asia-based investors got 56 per cent of the allocation and US investors 24 per cent. European investors received the remaining 20 per cent. “We are extremely pleased with the strong interest shown by top global investors in the offering. In the backdrop of a volatile global environment, the transaction was well executed, in the short time window available,” said Hemant Contractor, managing director and group executive for international banking business at SBI.

The issue was managed by BNP Paribas, Citigroup, Deutsche Bank, Hongkong and Shanghai Banking Corporation, JPMorgan and SBI Capital Markets.

“SBI’s senior management team clearly articulated a positive vision for the bank, and India, to investors around the world. The size and strength of the order book demonstrates investor confidence in the management team and SBI’s long-term prospects,” said Sunil Agarwal, head of the institutional client group for India at Deutsche Bank.

SBI’s offering was the 13th foreign currency bond issue by an Indian entity in the current calendar year.