The Busy Brains
26 Sept 2023
State Bank of India’s infrastructure bond issuance attracts strong investor interest, oversubscribed by over 5 times.
India's largest public sector bank, the State Bank of India (SBI), has successfully raised Rs 10,000 crore through its fourth infrastructure bond issuance. The bonds carry a coupon rate of 7.49%. This issuance has witnessed remarkable investor interest, with total bids amounting to Rs 21,045.10 crore, oversubscribing the base issue size of Rs 4,000 crore by over 5 times.
A total of 134 bids were received, showcasing a diverse range of participants, including provident funds, pension funds, insurance companies, mutual funds, and corporates. The funds raised from these bonds will be dedicated to bolstering long-term resources for financing infrastructure projects and the affordable housing sector.
In response to the strong demand, SBI has decided to accept Rs 10,000 crore at the mentioned coupon rate of 7.49%, with annual interest payments. This represents a spread of 12 basis points (bps) over the corresponding FBIL G-Sec par curve.
Prior to this issuance, the bank had successfully raised Rs 10,000 crore through Long Term Bonds on August 1, 2023, at a spread of 13 bps over the corresponding FBIL G-Sec par curve. It's noteworthy that the bank holds a AAA credit rating with a stable outlook from all domestic credit rating agencies for these financial instruments.
This latest issuance brings the total outstanding Long-Term Bonds issued by SBI to Rs 39,718 crore. It underscores the bank's ability to secure long-duration bonds at finer spreads, reflecting investor confidence in its financial stability and creditworthiness.