×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

SBI likely to sell bonds abroad in next quarter

SBI likely to sell bonds abroad in next quarter
PTI
Comment E-mail Print Share
First Published: Fri, Jun 04 2010. 03 45 PM IST
Updated: Fri, Jun 04 2010. 03 45 PM IST
Mumbai: Country’s largest lender, State Bank of India might look at raising money through a bond sale abroad during the next quarter provided that market conditions turn favourable and spreads narrow, an official said.
SBI, which has so far raised around $2.9 billion through the issue of Medium Term Notes (MTN), prefers the spreads to come down to 175-185 basis points over mid-swap from the current level of around 200-210 basis points.
At the current rate, SBI will have to pay a coupon rate of around 4.45-4.55%. The coupon rate for the bond issue is calculated based on the prevailing spreads above the five year mid-swap rate. Mid-swap rate is the equivalent of the London Interbank Offered Rate (LIBOR) for longer maturity bonds.
“We would be comfortable to raise the money at a spread of 175-185 basis points. This would be possible only when the market turn normal over the next three months,” an SBI official told PTI.
In October last year, SBI had mopped up $750 million (about Rs3,600 crore) through its MTN issue, which carried a maturity of five years and a coupon rate of 4.5%.
SBI, however, has not decided the amount to be raised in the next phase of MTN issue as this will depend upon the fund requirement in its overseas business. SBI has a headroom to raise above $2 billion under the MTN route, the official said.
State Bank is currently in discussions with a host of banks to advise it on the bond issue. These include Bank of America Merrill Lynch, Standard Chartered, HSBC, UBS, HSBC Barclays, Citi, JP Morgan amongst others.
An MTN programme allows an issuer to raise funds on an ongoing basis through various products such as floating rate notes or on a fixed rate bonds. SBI is likely to issue bonds through its London branch.
“Looking at things where they are, we do not have any urgent need to launch the next tranche of the MTN issue atleast in the immediate future as the market is expected to remain volatile on account of the ongoing European debt crisis,” the official said.
State Bank launched its USD five billion MTN programme in 2004 to finance its overseas expansion plans. Recently, a few other lenders like Bank of India and Axis Bank had also tapped the MTN route to raise sufficient funds to support their overseas business plans.
Late last year, country’s second largest lender, ICICI Bank had also raised USD 750 million through the issue of bonds at its Bahrain branch.
Comment E-mail Print Share
First Published: Fri, Jun 04 2010. 03 45 PM IST