State Bank of India (SBI) has secured $500 million via bonds issue through its London branch at a coupon rate of 5.25%, a pricing which is considered to be fine in a difficult macroeconomic environment.
The ‘Regulation S’ bond is benchmarked against the 5-year US Treasury and priced at a spread of 88 basis points over the benchmark.
Though the initial price guidance was around 120 basis points over US Treasuries, the bank said strong investor demand allowed the spread to compress by 32 basis points at final pricing.
The bonds, which mark the return of the bank to the public dollar market after almost a year, will be listed on SGX-ST, India INX and NSE-IX.
“The issue has been priced at the tightest spread among all India public bond issuances since the Reserve Bank of India’s swap announcement and reflects the confidence of the global investors in India’s growth story in general and credit quality of SBI in particular,” said Challa Sreenivasulu Setty, Chairman, SBI.
Indian banks have been chasing dollar issues after the RBI introduced the swap window on 8 June, making borrowing overseas cheaper.
Earlier in June this year, HDFC Bank had raised $750 million through a five-year overseas bond issue at a spread of about 90 basis points over US Treasuries. Axis bank and ICICI Bank had also raised funds through dollar bonds after the RBI’s swap facility.
The Notes will carry rating of BBB, BBB- and BBB+/Stable from S&P, Fitch and CareEdge Global, respectively, SBI said in a release.
BNP PARIBAS, Citigroup, Crédit Agricole CIB, Emirates NBD Bank PJSC, HSBC (B&D), MUFG and Standard Chartered Bank were the joint bookrunners for this issue.