State Bank of India (SBI) has appointed investment bankers for its proposed issue of dollar-denominated bonds to raise anywhere between $500 million and $1 billion, sources said.
It is likely to announce the sale of the bond in next 7-10 days. BNP Paribas, Citigroup, Deutsche Bank, HSBC, JPMorgan and SBI Capital Markets are likely to lead the book with road shows in Hong Kong, Singapore and London.
According to investment bankers, if SBI raises the funds soon, the bonds are likely to be priced at 2.2%-2.5% over US Treasuries. Five-year US Treasuries were trading at 0.7676% while the 10-year was at 1.8555% on Wednesday.
This rate would be lower than that paid by the bank in July, 2012, when it had raised $1.25 billion from a 5-year dollar-denominated bond issue at 3.75% over the US Treasuries to yield 4.125%. The issue was over-subscribed more than 5 times.
SBI’s overseas issue was expected by March 31 but bankers say there is still a strong appetite for Indian bonds. Taking advantage of excess liquidity in the global markets, Indian companies have mopped up $6.3 billion in 2013 through overseas bonds issuances, compared with $2.8 billion raised in the same period in 2012. Last year, Indian companies had raised a total of $9.8 billion.
Funds raised through this route in 2013 have been higher than the amount investment bankers had expected in January when Exim Bank raised $750 billion at 4.119% and attracted subscriptions worth $6.4 billion from 263 investors across the world.
Since January ten companies have raised funds from this route, including ICICI Bank, Power Grid, Tata Communications, Reliance Industries Ltd, Bank of India Suzlon Energy and IDBI Bank.