SBI may tap overseas bond market again depending on liquidity needs

The lender raised $500 million through five-year dollar bonds at 88 bps over US Treasuries and could return to the overseas market depending on its funding and liquidity needs

State Bank of India (SBI), which raised $500 million through a five-year United States (US) dollar bond at a spread of 88 basis points (bps) over the five-year US Treasuries on Tuesday, may tap the overseas bond market again if it needs additional liquidity, a senior official at the bank said.

 

“Depending on whether we need the liquidity or not. We are getting good rates in the market,” the senior official added.

 

The initial price guidance for SBI’s dollar-denominated bond issuance was 120 bps over US Treasuries, but the lender managed to compress the spread by 32 bps.

 

“SBI has concluded the issue of $500 million senior unsecured fixed rate notes having a maturity of five years and a coupon of 5.25 per cent payable semi-annually under regulations,” the bank said in an exchange filing.

 

While the expectation was that the bank would raise a higher amount, it raised only $500 million despite the peak order book exceeding $2 billion. The amount raised was based on the bank’s funding requirement and will be deployed for mobilising FCNR(B) deposits, another senior official added.

 

Since June, major Indian banks have tapped the dollar bond market to raise funds after the Reserve Bank of India (RBI) operationalised a concessional swap window under which it is absorbing part of the hedging cost, making it cheaper for banks to raise funds overseas. HDFC Bank was the first to tap the market, raising $750 million, followed by Axis Bank, which raised $300 million, and ICICI Bank, which raised $1 billion.