SBI taps overseas bond market to raise $1 bn

Written by fe Bureau | Mumbai | Updated: Apr 11 2014, 09:56am hrs
State Bank of India (SBI) has tapped the overseas bond market to raise $1 billion through a dual-tranche issue of five-year and 10-year bonds.

The issue closed with a final pricing of 210 bps over five-year US Treasury and 230 bps over 10-year US Treasury, according to a merchant banker. This pricing is finer than that of most other banks that have tapped the overseas markets recently.

As on Thursday, the five-year money would have been priced at 3.7% while the 10-year paper would see a coupon rate of 4.97%. The issue carries a BBB- rating by S&P Ratings and Baa3 by Moody's.

Previously, ICICI Bank had raised A$100 million through a five-year bond issue in March, which was priced at 250 bps over mid-swaps. IDBI Bank had raised $300 million through a 5.5-year bond issue in the same month, at a coupon rate of 5%.

The bond issue is not under SBI's medium-term note (MTN) programme and is a standalone document, bankers confirmed.

The bank had given an initial pricing of 240 bps over the US treasury for the five-year money and 265 bps over the treasury for the 10-year bond, said the banker. In April last year, the country's largest lender had managed to raise $1 billion through a five-year bond issue, which was priced 275 bps over the US Treasury yields.

The SBI scrip rose more than 2% on Thursday to their highest level in more than nine months and trading volume increased over 30% compared with the average 30-day volume. The scrip settled 1.99%, or R39.50 higher, at R2,024.50 on the NSE. More than 32 lakh shares were traded on the BSE and NSE compared with an average 25.92 lakh shares traded in the previous 30 sessions on both the exchanges.

In contrast, the Bank Nifty ended up 0.1% and the benchmark Nifty settled 0.27% lower from the previous close. From its lows in September, the stock has gained nearly 38%, Bloomberg data show.

On Tuesday, Oil India had raised $1 billion with a similar dual-tranche issue, making it the single largest dual-tranche Reg S issue from the country, and the oil majors largest-ever.