Industry Odisha Bureau, Aug 12: State Bank of India is returning to the public dollar bond market. The lender expects strong investor interest in its planned five-year dollar bonds. Guidance places pricing near one hundred twenty basis points above U.S. Treasuries.
SBI expects to raise at least $500 million from the bond offering. Strong investor demand could push the final transaction size beyond one billion. Bankers are marketing the bonds with sale completion expected by week’s end.
The bond issuance comes as the Reserve Bank opened a swap facility. The RBI facility makes overseas borrowing cheaper for Indian banks seeking funds. That improved funding backdrop has attracted major Indian lenders to dollar markets.
SBI previously deferred its $1 billion public dollar bond sale during June. Rising borrowing costs followed heavy issuance by competing Indian lenders at that time. Current market conditions now appear more favorable than the earlier June environment.
Following its June postponement, the lender raised $600 million through private placement. That private placement consisted of three-year bonds carrying one hundred basis point spread. The spread was calculated over the Secured Overnight Financing Rate, or SOFR.
One banker described SBI’s offering as presenting a sizeable premium to investors. However, final pricing could tighten by as much as thirty basis points. Bankers also expect strong demand could push the transaction size higher substantially.
Fitch Ratings has assigned an expected rating of triple B minus level. The proposed notes are senior unsecured and unsubordinated direct obligations of SBI. They rank equally with other unsecured and unsubordinated debt of the lender.
The marketing process began recently with sale completion expected by week’s end. International bond investors are the primary target for this dollar bond issuance.
Major private lenders including HDFC Bank and Axis Bank accessed dollar markets. ICICI Bank also raised dollar funds in June and July this year. Their successful issuances helped demonstrate strong international appetite for Indian bank debt.
SBI’s return demonstrates improving conditions for Indian banks in international debt markets.
