SBI raises $1 bn under 5-year syndicated social loan for ESG funding

Priced at three-month SOFR plus 130 bps; largest such ESG loan by bank in Asia-Pacific; to also use proceeds for affordable housing, SHG lending

The country's largest lender, State Bank of India, has raised $1 billion in its largest syndicated social loan for onward lending to ESG projects, affordable housing and self-help groups (SHGs).  

The deal was the largest Environmental, Social, and Governance (ESG) loan by a commercial bank in the Asia Pacific and the second largest social loan globally.

SBI executives said the five-year loan was priced at the secured overnight financing rate (SOFR) of three months plus 130 basis points. This was all-in cost pricing.

The base size was $500 million with a green shoe option of $500 million. The facility of $1 billion was arranged through a mandated lead arranger and bookrunner (MLAB). MUFG and Taipei Fubon Commercial Bank were the joint social loan coordinators.

SBI said in a statement that this is its inaugural social loan and the first syndicated loan in the past five years.  The issuance, which saw overwhelming participation from banks across Taiwan, Japan, China, and the Middle East, was fully subscribed along with the $500 million green shoe.

While money raised through the Hong Kong branch will be set aside for overseas operations, an equivalent amount will be deployed in identified sectors such as Self-Help Groups and affordable housing, SBI executives said.  

The bank has developed an ESG financing framework under which it intends to issue green, social, and sustainability bonds and loans. It will use the proceeds to finance or refinance, in whole or part, existing or future projects that are expected to create positive environmental and social impact in India.

The bank will prepare an annual statement on deployment of funds. SBI had engaged Sustainalytics, an ESG research, ratings and data firm, to review its ESG financing framework.

SBI chairman Dinesh Khara said as a responsible and sustainable organisation, the bank is committed to conducting business operations with the highest standards of ESG.

The long-term success depends not only on financial performance but also on the ability to make a positive impact on the environment, on society, and on stakeholders, Khara added.

In January 2023, Export Import Bank of India, a 100 per cent government-owned financial institution, mobilised $1 billion via a 10-year sustainability bond offering. It was the first Indian issuer to open the markets for dollar and sustainability bond issuances in 2023.