NEW DELHI: As part of its $10-billion medium-term notes (MTN) programme, State Bank of India (SBI) has hit the overseas debt market to raise $500 million. MTN is a debt note that usually matures in five to 10 years.
The bank, India’s largest lender, had raised $300 million through a perpetual bond issue in September 2014. Out of the $10-billion MTN target, SBI has raised $3.5 billion so far. This includes $400 million raised through perpetual bonds. Bank of America Merrill Lynch, Citigroup, HSBC, BNP Paribas, DBS Bank, MUFG and SBI Capital Markets acted as joint lead managers to the issue.
The bank has also secured investment grade ratings to the bond sale from all the three international rating agencies — Moody’s, S&P and Fitch.
According to Moody’s, which has assigned a Baa3 rating to the senior unsecured notes, the bank’s rating has secured a one-notch uplift, because of the high-level support in a stressed situation for the bank from the government.
As of March 2016, SBI represented 16.3 per cent of loans in the system and 17.6 per cent of the deposits. The government has a 60.18 percent stake in the bank.
Meanwhile, Fitch has assigned BBB- ratings to the $10 billion MTN programme. Fitch said the bank was likely to receive around $835 million in new capital from the government shortly, out of the total $1.1 billion earmarked for this financial year. This is around 5 per cent of its 2015-16 equity. Additionally, the bank’s plans to raise $2.2 billion directly from the market have received shareholder approvals.
S&P, on the other hand, has issued a ‘BBB-’ long-term issue rating. The rating on the MTN reflects the long-term counterparty credit rating on SBI, according to S&P. SBI will raise $500 million through its London branch and the bonds will be listed on the Singapore Exchange.