SBI to raise up to $2 bn via bonds in FY23

State Bank of India (SBI), the country’s largest lender, on Tuesday said it will raise long term capitals up to $2 billion from international markets during the current financial year (FY23). The move is being seen as part of the bank’s strategy to diversify its international investor base as well as to strengthen its capital base in the backdrop of rising credit demand.

The PSU lender informed the exchanges that its board has given nod to the proposal of raising long term funds in single or multiple tranches through the issuance of senior unsecured notes. The fund will be raised through a public offer and private placement of bonds in U.S. dollar or any other convertible currency, it added.

“The Executive Committee of the Central Board in its meeting on 10th May, 2022 has approved the proposal to examine the status and decide on long term fundraising in single/multiple tranches up to US$ 2 Billion (US$ Two Billion) under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2022-23,” SBI said in a BSE filing on Tuesday.

Earlier this year, SBI had $300 million “Regulation S” Formosa bonds at a coupon rate of 2.49%, benchmarked against the 5 year U.S. Treasury and priced at a spread of 100 basis points over the benchmark. The bank had proposed to list the bonds on Taipei Exchange (TPEx), Singapore Exchange Securities Trading Ltd. (SGX-ST), and India International Exchange IFSC Ltd (India INX).

Besides, the state-owned lender had last month raised $500 million (around ₹3,800 crore) through a three-year syndicated loan via its IFSC Gift City branch as part of its strategy to develop the branch as an international financial hub. This was the first offshore secured overnight financing rate (SOFR) linked loan raised by the public sector lender through its Gift City branch. The offshore loan facility was for $400 million, with a green shoe-option of $100 million.

The IFSC in GIFT City (GIFT IFSC) seeks to bring back those financial services transactions that are currently carried on outside India by overseas financial institutions and overseas branches/subsidiaries of Indian financial institutions to the Indian shores. Specifically, it seeks to bring them to a centre that has been designated for all practical purposes as a location having the same ecosystem advantage as their present offshore location, which is physically in India.