SBI Raises $500 Million Through 5-Year Bond Sale In Overseas Market
The bank had so far raised $3.5 billion out of its $10 billion MTN programme.
The nation's largest lender State Bank of India has raised $500 million as part of its $10-billion medium-term notes programme through a sale of five-year dollar bonds.
The funds were raised at a coupon rate of 3.25 percent payable semi-annually, said the lender in a notification to the stock exchanges. The bonds were priced at 145 basis points above the US 5-year Treasury bond.
The bonds will be issued through the bank’s London branch and shall be listed on the Singapore stock exchange, said the bank.
We are pleased to see the robust demand for our transaction and the strong perception of our credit by the international investor community. The execution process was swift and ensured a strong momentum to our transaction. The lead managers have provided us with the right pricing strategy to help us achieve our targets for this fund raising exercise.Arundhati Bhattacharya, Chairman, State Bank of India
All the three international rating agencies had accorded investment grade ratings to the $500 million bond sale by SBI which has been away from the overseas debt market for some time now.
SBI last raised overseas debt by issuing dollar denominated notes worth $300 million in September 2016. Prior to that in February 2014, it had raised $1.25 billion in another dollar money sale. The bank has so far raised $3.5 billion out of its $10 billion MTN programme, including $400 million in perpetual bonds. The bank had also concluded AT1 Basel III- compliant non-convertible, perpetual non-call five-year subordinated, unsecured notes at a coupon 5.5 per cent payable semi-annually under $10 billion RegS bond programme.
Moody's has assigned a Baa3 rating to the senior unsecured notes, issued under its $10-billion MTN programme. The drawdown will be carried out from its London branch, and the bonds will be listed on the Singapore Stock Exchange, Moody's said in a statement.
Fitch has also assigned 'BBB-' ratings to the programme that constitutes direct, unconditional, unsubordinated and unsecured obligations of the issuer.
"The issue will at all times rank pari-passu among themselves and with all other unsubordinated and unsecured obligations of State Bank," Fitch said, adding the tenor of the issue is expected to be around five years.
S&P too assigned 'BBB-' long-term issue rating in line with the sovereign rating, to the proposed issue of SBI's senior unsecured notes. The rating on the notes reflects the long-term counterparty credit rating on SBI, S&P said.
According to Moody's, SBI's final Baa3 rating incorporates a one-notch uplift due to its assumption of the bank's very high level of support from the government in a stressed situation.
The assumption of high government support is based on a combination of SBI's large size and the critical role it plays in the country's banking system, representing around 16.3 percent of system loans and 17.6 percent of system deposits as of March 2016, its nationwide reach, and the government's 60.18 percent ownership in the lender.
Fitch said, post this issue, SBI's core capitalisation is set to improve in the year to March 2017 from a core equity tier 1 ratio of 10.3 percent in September 2016. The bank is likely to receive around $835 million in new capital from the government shortly out of the total $1.1 billion earmarked for this fiscal, which is around 5 percent of its 2015-16 equity and has plans to raise an additional $2.2 billion directly from the market, for which it has received shareholder approvals, the ratings agency added.