SBI infra bonds raise Rs 10,000 crore
The sale of SBI infrastructure bonds generated Rs. 10,000 crore. The bonds got 115 bids from various investors, including corporate investors, provident funds, pension funds, insurance firms, and mutual funds.
MUMBAI: State Bank of India (SBI), the largest lender in the nation, issued its third issue of infrastructure bonds on Monday, raising Rs 10,000 crore at a coupon rate of 7.54%.Investors responded favourably to the offering of 15-year infrastructure bonds, putting up bids totaling Rs 21,698 crore, exceeding the base issue size by 4.34 times. Bonds attracted 115 offers from buyers, including mutual funds, corporations, insurance firms, provident funds, and pension funds.
The bank chose to take Rs 10,000 crore at a coupon rate of 7.54% payable yearly for a tenor of 15 years based on the response. The coupon rate of 7.54% reflects a spread over the matching government securities (G-Sec) curve of 13 basis points.
According to a statement from SBI, the bond proceeds “will be used to enhance long-term resources for funding infrastructure and the affordable housing segment.” “This offering is also quite significant because the Bank has been successful in raising 15-year long-term bonds progressively at a finer spread despite the recent hardening of yields, and it will aid the bank in lending to infrastructure on a long-term basis. We think that by encouraging banks to issue bonds with longer maturities, this issuance may aid in the formation of a long-term bond curve.
Investors’ enthusiastic response may inspire other banks to issue bonds with longer maturities. This is the first long-term bond of this tenor issued by a bank in the current fiscal year. A series of infrastructure bonds worth Rs 9,718 crore were previously raised by SBI in January of this year at a margin of 17 basis points over the benchmark rates for government bonds. In December 2022, the bank issued its first infrastructure bond, raising Rs 10,000 crore at a coupon rate of 7.51%.
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