State Bank of India (SBI), a major player in India's banking sector, is planning to raise up to $750 million through overseas bond sales. The bond issue is being arranged by leading financial institutions including JP Morgan, BoFA Securities, Standard Chartered Bank, and HSBC, according to two banking industry sources. This fundraising initiative is part of a broader capital-enhancement strategy for the government-owned bank, and the bond sale is expected to coincide with the start of India's autumnal festive season, a period of high demand for retail credit.
The bonds issued by SBI will be benchmarked against 5-year US treasury bonds and are likely to be priced with a spread of 140-145 basis points over the benchmark, as reported by the first source. These bonds will have a tenor of 5 years.
While an SBI spokesperson did not respond to inquiries, officials at JP Morgan, BoFA Securities, Standard Chartered Bank, and HSBC were unavailable for immediate comments.
SBI is conducting this fundraising under its $10 billion medium-term note program, and the proceeds generated from this bond issuance will primarily be utilized for lending and other debt-related purposes, as confirmed by one of the sources.
"The bank has appointed four foreign banks to raise around $500 million to $750 million through the issuance of US dollar-denominated bonds," the source revealed. "The bond will be priced in line with the existing bond price."
Earlier in the year, SBI secured board approval to raise $2 billion in foreign currency bonds. In April, the bank successfully raised $750 million through the issuance of 5-year Regulation S (Reg S) bonds at a coupon rate of 4.875%. Furthermore, in February, SBI raised a syndicated social loan amounting to $1 billion, marking a significant milestone as the bank's first social loan issuance.
SBI faces an upcoming maturity of $600 million worth of bonds later this month and $800 million worth of instruments set to mature in early 2024. This overseas bond issue forms part of the bank's broader financial strategy, reinforcing its position as a key player in India's banking landscape.
