State Bank of India raised $1.25 billion from an overseas-dollar-denominated bond sale on Thursday. This is the largest single-tranche offering by a public sector bank from India.
The bank’s London branch issued 4.125 per cent five-year-notes due in July 2017 at 375 basis points, spread over five-year US Treasuries. The notes offer the lowest ever coupon achieved for an Indian issuer in the US dollar bond market in the five-year tenure, said a banker close to the development. The notes, a debt instrument, are rated Baa2 by Moody’s and BBB- by Standard & Poor’s.
This is also the first public sector bank US dollar bond issuance out of India since May 2011. The last dollar-denominated bond offering by an Indian company was in February when Axis Bank raised $500 million (in the form of five-year medium-term notes) at 440 basis points spread over five-year Treasuries.
SBI had hired six global giants — Citigroup, Barclays, Bank of America Merrill Lynch, Deutsche Bank, JP Morgan and UBS — to manage the debt sale.
“The SBI bond has been priced at an attractive level. Its success can be attributed to SBI’s track record, identification of a window of opportunity in volatile markets and seamless execution,” said Mr Rajiv Nayar, Managing Director & Head of Capital Markets Origination, Citi India.
Mr Nayar said that the SBI issuance at an oversubscription of 5.4 times, has provided a window of opportunity to other high quality Indian issuers to tap international bond markets.
For the latest debt sale, SBI received an order book of $6.8 billion, resulting in an over-subscription of 5.4 times. As many as 350 investors participated in it. The bonds will be listed on the Singapore exchange, sources said.
As for the geographical representation of investors, as much as 47 per cent came from Asia, 31 per cent from the US and 22 per cent from Europe. As regards investor profile, about 49 per cent were fund managers, 24 per cent were private banks, 12 per cent banks, 12 per cent insurance funds and 3 per cent were public companies.
srivats.kr@thehindu.co.in