SBI Raises Rs 10,000 Crore Via Infrastructure Bond Issuance at 7.36% Coupon Rate

The State Bank of India, headquartered in Mumbai is a Fortune 500 company and is the largest and oldest bank in India with a history of more than 200 years, The Bank has raised Rs.10,000 crore through infrastructure bonds.

SBI Infrastructure Bonds

The State Bank of India (SBI) has successfully raised Rs 10,000 crore through 15-year infrastructure bonds, offering a coupon rate of 7.36 percent. This significant issuance aims to support projects in sectors such as power and roads. With this latest issuance, the total outstanding Long-Term Bonds of SBI now amount to Rs 49,718 crore. The proceeds from these bonds will be used to strengthen long-term resources, specifically targeting funding for infrastructure and affordable housing segments, thereby enhancing the bank’s capacity to finance essential development projects.

SBI Chairman Dinesh Khara stated that this bond issuance will contribute to developing a long-term bond curve and inspire other banks to issue longer-tenor bonds. 

Details of the Issue

The coupon rate of 7.36 percent represents a spread of 21 basis points over the corresponding government bond yield curve. The instrument is rated AAA with a stable outlook. In September 2023, SBI issued a 15-year infrastructure bond with a coupon of 7.49 percent. The current issuance was oversubscribed by about four times the base issue size of Rs 5,000 crore, receiving 143 bids, indicating wider and more diverse participation from investors, including provident funds, pension funds, insurance companies, mutual funds, and corporates.

Conclusion:  The State Bank of India’s successful Rs 10,000 crore bond issuance at a 7.36% coupon rate not only boosts funding for infrastructure and affordable housing but also fosters a long-term bond market. The oversubscription and diverse investor participation in the bond issue highlight strong market confidence and the potential for other banks to follow suit in issuing longer-tenor bonds.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.