MUMBAI: The nation’s largest lender State Bank of India has said it has closed its foreign debt issue raising $500 million from international debt investors through unsecured fixed rate notes, offering 4.5% to investors in annual reruns.
The issue of unsecured fixed rate notes comes after the nation’s sovereign rating upgrade to BBB with stable outlook by the international rating agency S&P after 18 years holding it at BBB-, which also followed the bank’s own rating upgrade.
In a statement, chairman CS Setty said the bond is benchmarked against the five-year US treasury and the final price spread came in at 75 bps over the benchmark.
“The transaction received an overwhelming response and saw strong interest from investors across geographies with a final order book in excess of $ 1.1 billion across 85 accounts. On the back of strong demand with a peak orderbook of $2 billion, the price guidance was revised from T+105 bps area to T+75 bps,” Setty added.
He further said the successful issuance of $500 million is a testament to the strong appetite for bonds of SBI and to the diversified investor base the bank has in offshore capital markets, allowing it to efficiently raise funds from the leading global fixed income investors.
“The issue is priced at the best ever spreads for a domestic issuer and reflects the confidence of the global investors in our growth story in general and credit quality of the bank in particular. The tight pricing has demonstrated reduction in the borrowing cost for Indian issuers subsequent to the improvement in the credit profile and sovereign rating upgrade,” he concluded.
Given the bank’s strong fundamentals, the final pricing came down significantly to 4.5% (coupon rate) from the initial guidance of 105 bps over the US treasury yields.
Earlier in the day, an investment banker handling the issue told TNIE that the bank was open to raise up to $1 billion depending on the investor interest.
The five-year money, worth $500 million, was raised through the London branch of the bank, SBI said in a late evening exchange filing. The 4.5% fixed rate coupon is payable bi-annually, the statement added without disclosing investor details by sector or geography as well as how good was the subscription.
The issue is part of the nation’s largest bank’s $10 billion medium term note programme.
