State Bank of India Plans $1.20 Billion Infrastructure Bond Issue, Bankers Say

The State Bank of India (SBI), the nation's largest lender, is gearing up to raise approximately 100 billion rupees ($1.20 billion) through infrastructure bonds, according to reports from merchant bankers on Tuesday.

Bond Details and Market Discussions

SBI has initiated discussions with market participants regarding the issuance of a 10-year or 15-year infrastructure bond. The final tenor will be determined based on investor feedback, as per one banker who preferred to remain anonymous due to restrictions on speaking to the media.

This marks the lender's first bond issuance of the current financial year and the first infrastructure bond sale in India this fiscal year. SBI is expected to invite bids for the bond issue in early July.

Previous Fundraising Activities

Earlier this year, in January, SBI successfully raised 50 billion rupees through perpetual bonds at an 8.34% coupon rate. In the previous financial year, the bank accumulated a total of 200 billion rupees by issuing 15-year infrastructure bonds.

Additionally, in early May, SBI raised $100 million via its London branch by issuing three-year senior unsecured floating-rate bonds. These bonds were sold at a spread of 95 basis points above the Secured Overnight Financing Rate (SOFR).

Market Implications and Expectations

The planned bond issuance is poised to enhance SBI's capacity to finance long-term infrastructure projects, thereby contributing to India's infrastructure development goals. The move is also anticipated to set a precedent for other financial institutions in India, signaling a strong start to the infrastructure bond market for the current fiscal year.

As India's largest lender, SBI's actions are closely watched by market participants. The successful execution of this bond issue could bolster investor confidence and pave the way for more robust infrastructure financing in the country.

SBI's upcoming infrastructure bond issue, aimed at raising $1.20 billion, underscores the bank's strategic initiatives to support long-term infrastructure projects. This initiative not only reflects SBI's robust market position but also highlights the broader potential for infrastructure development in India through strategic financial instruments.