MUMBAI: State Bank of India (SBI), country’s largest lender, on Monday raised Rs 10,000 crore at a coupon rate of 7.54% via its third infrastructure bond issuance. The 15-year infra bonds issuance saw strong response from investors with bids of Rs 21,698 crore and was oversubscribed by 4.34 times against the base issue size. Bonds received 115 bids from investors which included provident funds, pension funds, insurance companies, mutual funds and corporates.
Based on the response, the bank decided to accept Rs 10,000 crore at a coupon rate of 7.54% payable annually for a tenor of 15 years. The coupon of 7.54% reflects a spread of 13 basis points over the corresponding government securities (G-Sec) curve.
“The proceeds of bonds will be utilized in enhancing long-term resources for funding infrastructure and the affordable housing segment,” said SBI in a statement. “This issuance is also very significant as despite the recent hardening of yields, the Bank has been successful in raising 15-year long-term bond successively at a finer spread and it will help the bank in lending long term to infrastructure. We believe this issuance may help in developing a long-term bond curve and encourage banks to issue bonds of longer tenor,” it added.
The strong response from investors may encourage other banks to issue longer-term bonds. This is the first issuance of long-term bond by any bank for this tenor in the current financial year. Prior to this, in January this year, SBI had raised another set of infrastructure bonds worth Rs 9,718 crore at a spread of 17 bps over the standard government bond rates. The bank’s first infrastructure bond issuance was in December 2022 through which it raised Rs 10,000 crore at a coupon rat e of 7.51%.