SBI raises $600 mn from overseas bond sale at a coupon rate of 1.8%2 min read . Updated: 07 Jan 2021, 04:21 PM IST
SBI says it saw strong interest from investors across geographies with a final order book at over $2.1 bn
The nation's largest lender State Bank of India (SBI) on Thursday raised USD 600 million from selling bonds to international investors at a coupon of 1.80 per cent.
The issue, oversubscribed by 2.1 times, is part of the bank's USD 10 billion medium term note programme, the ratings of which were withdrawn by the rating agency Moody's on Wednesday.
The 5.5-year issue denominated in US dollars was priced at 140 basis points (bps) over the US treasury, the bank said in a release adding this is the lowest pricing for any Reg S/144a issue from the country with such a maturity. The notes are expected to carry a final rating of Baa3, BBB- and BBB- from Moody’s, Standard and Poor’s and Fitch respectively.
Earlier this week, the Exim Bank had sold USD 1 billion at a coupon of 2.25 per cent, the lowest for any such issue.
With this issue, two domestic financial institutions -- Exim Bank and SBI -- have opened the new year on a high raising USD 1.6 billion in a week.
The bonds issued through the SBI's London branch, will be listed on Singapore Exchange and India INX, the international bourse from BSE, the release said.
Regulation S bonds are sold by foreign issuers in the US and other overseas markets but cannot be subscribed by resident American investors.
The bank said strong demand helped it tighten pricing by 35 bps from initial guidance of T 175 bps to T 140 bps, arriving at a coupon of 1.80 per cent per annum, which it said is the lowest coupon achieved by a domestic issuer for a 5.5-year issuance to date.
This is the first public USD bond sale by a domestic bank since the onset of the pandemic last year.
The lender said the transaction was well received and saw strong interest from investors across geographies with a final order book in excess of USD 2.1 billion.
C. Venkat Nageswar (Deputy Managing Director – International Banking Group) said, “The successful issuance demonstrates the strong investor base SBI has created for itself in offshore capital markets allowing it to efficiently raise funds from the World’s leading fixed income investors, even during periods of heightened volatility. This is an indication of confidence global investors have in the Indian banking sector generally, and in SBI in particular and is also testament to the exceptional access that SBI enjoys in the global capital markets"
BofA Securities, Citigroup, HSBC, J.P. Morgan, MUFG, SBICAP and Standard Chartered Bank were the Joint Bookrunners for this offering.