SBI to raise $500 mn in non-dollar MTN issue

India’s largest lender, the State Bank of India, was planning to raise $500 million through a non-dollar bond by November, under its medium-term note programme, a source close to the development has said.

“We are coming in the market to raise $500 million and it will be a non-dollar ,” said the source. SBI was yet to finalise the lead arrangers and the road shows would start next month, the source added.

The state-owned lender was confident the issue would get a good response from investors despite sovereign debt worries in some European countries, he said, adding the swap rates were favourable for pricing the issue.

After this issue, the bank will still have a headroom of over $1.5 billion under its $5-billion MTN plan. It, however, had the option to raise funds outside the MTN plan, if needed, the source added.

SBI raised $750 million under the MTN programme in October 2009 and raised more funds on two occasions outside the MTN plan in 2010.

The state-owned lender was looking to expand its international branch network from the current 150, by adding 40 more branches, the source said.

“These are in the pipeline, in various stages. For some, we require licences, for some, we have approached RBI, and we already have licences for some others,” he said, adding that SBI would be opening two branches in Bahrain next month. The bank aimed to have 20 per cent of its total business and around 25 per cent of its net profit from global operations in three to four years, he said.

As on June 30, SBI’s international operations contributed around 13 per cent to its total revenue.

SBI had presence in 32 countries and subsidiaries in US, Mauritius, UK, Nepal, Indonesia, Russia and Bhutan. It might set up a subsidiary in Botswana “shortly”, he said.