SBI Shelves ₹15,000 Crore Fundraising Plan Due to High Bond Yields

SBI has decided to delay its ₹15,000 crore ($1.7 billion) bond sale due to high bond yields. Despite a rate cut and improved liquidity from the Reserve Bank of India (RBI), yields have remained elevated, making fundraising less attractive. The bank now plans to tap the market in the next financial year, starting in April.

Why SBI Delayed Fundraising

SBI had been waiting for a favourable market window, but bond yields have stayed high for several weeks. Given the current conditions, the bank has chosen to hold off on issuing bonds in the near term, sources said. SBI has reviewed its asset-liability position and, despite having board approval, decided to postpone the bond sale.

Rising Bond Yields Impacting Plans

Yields on India’s 10-year ‘AAA’-rated corporate bonds have increased by 15 basis points since early February. This rise has occurred despite the RBI reducing the policy repo rate by 25 basis points and infusing liquidity into the banking system.

Details of the Planned Bond Issuance

SBI had initially planned to raise funds through:

• ₹5,000 crore via Basel III-compliant Additional Tier-I perpetual bonds
• ₹10,000 crore through 15-year infrastructure bonds

In October, SBI had raised ₹5,000 crore at an interest rate of 7.98% via perpetual bonds.

Fundraising by Other Banks

Other public sector banks, including Bank of India, Punjab National Bank, and Bank of Maharashtra, raised a combined ₹7,252 crore through infrastructure bonds in February. However, this was only about half of their original fundraising target.

About SBI

SBI is the largest public sector bank in india and a multinational financial services institution headquartered in Mumbai. It holds a 23% market share in assets and controls 25% of the country’s total loan and deposit market.

As of March 17, at 12:48 PM IST, SBI share price  (NSE: SBIN) is trading at ₹723.65, down by ₹4.20 (0.58%) for the day. The stock opened at ₹728.90 and reached an intraday high of ₹731.25, while the low was ₹722.30. 

Conclusion

SBI’s decision to delay fundraising highlights the impact of high bond yields on borrowing plans. The bank will reassess its funding needs in the next financial year, keeping market conditions in mind.

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