SBI successfully raises Rs 10,000 cr via long-term infrastructure bond

The bidding for the bonds concluded on July 31, and the raised funds will be utilized to strengthen SBI's long-term resources for financing infrastructure projects and affordable housing segments, as stated by SBI in an official statement.

"The tenor of these bonds is 15 years. This is the first issuance of long-term bonds by any bank for this tenor in the current financial year. The issue attracted an overwhelming response from investors with bids of Rs 21,698 crore and was oversubscribed 4.34 times against the base issue size,” the statement said.

The bank received a considerable response, with 115 bids submitted, indicating wide participation from various investors such as provident funds, pension funds, insurance companies, mutual funds, and corporates.

Based on the strong response, SBI decided to accept the raised amount of Rs 10,000 crore at a coupon rate of 7.54 percent, payable annually, for a tenor of 15 years.

This issuance represents a spread of 13 basis points (bps) over the corresponding Financial Benchmark of India Limited (FBIL) G-Sec par curve.

On January 19, 2023, SBI raised infrastructure bonds worth Rs 9,718 crore at a spread of 17 bps over the corresponding FBIL G-Sec par curve.

The bank holds a AAA credit rating with a stable outlook from domestic credit rating agencies for these instruments.

The successful issuance of these long-term bonds is noteworthy, particularly in the context of the recent increase in yields.

SBI's ability to raise 15-year long-term bonds at a finer spread demonstrates its strength, and this move is expected to facilitate the bank in offering long-term loans for the development of the infrastructure sector.

This issuance is likely to contribute to the development of a long-term bond curve and encourage other banks to issue bonds with longer tenors.