India’s State Bank of India (SBI) has successfully priced a 5-year $750 million bond at a coupon rate of 4.875%, issued under its MTN (medium-term note) programme. The bank offered a rate 145 basis points above the five-year US treasury bond, reflecting strong demand for credit despite the Reserve Bank of India raising interest rates by 250 basis points since May 2021. SBI’s bond was listed on the Singapore SGX and India INX, Gift City. The final order book was around $2.9 billion from 181 accounts, despite the initial order book being higher at $5.4 billion. The notes are expected to carry a final rating of BBB- from both Standard & Poor’s and Fitch.
Dinesh Khara, State Bank of India Chairman, said, “The issue demonstrates global investors’ confidence in the Indian banking sector in general and in SBI in particular, and it also attests to SBI’s unparalleled access to global capital markets.’’ The successful issuance reflects SBI’s ability to efficiently raise funds from the world’s leading fixed-income investors, even during periods of heightened volatility. Citigroup, Emirates NBD Capital, HSBC, J.P. Morgan, MUFG and Standard Chartered Bank were the joint global co-ordinators and joint lead managers to the issue.
SBI’s shares gained 2.32% on Friday, closing at INR 578.05 on the Bombay Stock Exchange (BSE), India’s largest lender. The issue highlights good investor confidence in the Indian banking sector, with SBI successfully raising funds through multiple bond issuances. In March 2023, SBI Cards and Payment Services Ltd, a subsidiary of SBI, reported a marginal increase in net profit to INR 596 crore in the quarter ended March 2023 compared to INR 581 crore a year ago. Total income of SBI Cards increased to INR 3,917 crore from INR 3,016 crore in the year-ago period.
Overall, the successful issuance of SBI’s bond reinforces confidence in the Indian economy, with investors showing strong demand for credit despite interest rate hikes. SBI’s ability to raise funds from leading fixed-income investors further attests to its credibility and access to global capital markets.
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