State Bank of India has raised ₹10,000 crore via infrastructure bonds at a rate of 7.49 per cent. This is the state-owned lender’s fourth infrastructure bond issuance.

The bond issue was subscribed over five times, receiving 134 bids worth ₹21,045 crore against the base issue size of ₹4,000 crore. Investors included provident funds, pension funds, insurance companies, mutual funds and corporates, among others.

SBI will use the proceeds from the issue to enhance long-term resources for funding infrastructure and the affordable housing segment, it said in a release.

Previous bond issues

Prior to this, SBI had in July 2023 raised ₹3,101 crore via additional tier-I (AT-1) bonds and ₹10,000 crore via long-term 15-year infrastructure bonds. With the current issuance, the total outstanding long-term bonds are at ₹39,718 crore.

“This issuance is also very significant as the bank has been successful in raising long-duration bonds successively at a finer spread. We believe that this issuance may help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor,” the bank said.

Market borrowing by banks has seen a jump since June 2024 as both PSU and private banks have been looking to tap the market through long-term bonds to shore up their capital and support lending. Higher yields have also ensured strong demand for such bonds with investors looking to lock-in their money at higher levels.

Earlier this financial year, Kotak Mahindra Bank raised ₹1,895 crore via 7-year infrastructure bonds at 7.55 per cent, IDFC First Bank raised ₹1,500 crore via 10-year, tier-II bonds at 8.40 per cent, and Punjab National Bank raised ₹3,090 crore via tier-II bonds at 7.74 per cent.

In the coming week, PNB is expected to raise up to ₹3,000 crore via AT-1 bonds and Canara Bank is seen raising up to ₹5,000 crore via 10-year infrastructure bonds, according to market sources.

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