SBI raises $700 mn by March

SBI raises $700 mn by March
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First Published: Mon, Feb 05 2007. 06 18 PM IST
Updated: Mon, Feb 05 2007. 06 18 PM IST
By Agencies
State Bank of India , the nation’s biggest, plans to raise $700 million by March, selling bonds overseas, less than a week after Standard & Poor’s raised its ratings for the country to investment grade.
Proceeds from the sale will be used to expand capital and lending, Chairman O.P. Bhatt told reporters in New Delhi after attending a meeting of bankers with finance minister P. Chidambaram. The Mumbai-based bank may also raise additional funds selling new shares to individuals or new stock to existing shareholders, Bhatt said, without giving more details.
“The equity issue could be either a public or a rights issue,” said Bhatt. “We have not applied our mind to either about timing or about pricing. It will be some time in the next financial year.”
State Bank and other Indian finance companies are raising funds to meet rising demand for credit from companies and consumers in an economy that expanded at an annual pace of 9 % last year. The RBI on July 21 permitted banks to increase capital by selling debt overseas.
“The medium-term note plan in foreign currency, we will access before the end of March,” said Bhatt. “We are also planning some loans in the local currency.”
State Bank’s rating was raised one level to BBB- by Standard & Poor’s on Jan. 30, following the rating company’s upgrade of India’s sovereign rating by one level.
Fundraising Doubled
State Bank in August 2005 doubled its fundraising program to $2 billion by selling medium-term notes overseas as part of a plan to expand capital to meet central bank rules.
The bank last month increased the $300 million of bonds it sold in December to $500 million. The five-year floating-rate notes pay half a percentage point more than the three-month London interbank offered rate, a benchmark for corporate borrowing .
The country’s biggest lender hired Barclays Plc, Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc. to sell the dollar-denominated bonds.
Indian lenders raised $4.26 billion selling debt overseas compared with $6.68 billion of rupee-denominated securities, since they were allowed to raise capital from foreign bond sales on July 21.
The bank’s shares, which have gained 48 percent over the past six months, gained Rs15.45 , or 1.31 percent, to Rs1196.8 at the 3:30 p.m. close on the Bombay Stock Exchange.
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First Published: Mon, Feb 05 2007. 06 18 PM IST
More Topics: Money Matters | Equities |