SBI sees strong demand for 5-year dollar bond, tightens pricing
MUMBAI: State Bank of India, the country’s largest lender, drew strong demand in its return to the public dollar bond market after nearly a year, with pricing tightening sharply from initial guidance, three merchant bankers said on Wednesday. SBI raised $500 million through a five-year dollar bond issued via its London branch, the lender said in a stock exchange filing late on Tuesday. These…
Mumbai-based State Bank of India successfully tapped the public dollar bond market, in its return to the market after nearly a year, by issuing a $500 million five-year bond priced at a spread of 88 basis points over U.S. Treasuries. The bond, issued via its London branch, carries a coupon of 5.25% payable semi-annually. This pricing, which is significantly lower than the initial guidance of 120 basis points, was in line with CreditSights' expectations.
CreditSights analysts noted that the initial spread premium has started to fade as supply is absorbed, and anticipate further tightening to around 80 basis points in the secondary market. This comes after Indian banks have been cautious about supplying the dollar bond market due to attractive foreign-currency deposit rates and expectations of a broad supply following the Reserve Bank of India's swap concession window.
SBI's bond issuance comes as Indian banks are increasingly turning to dollar issues, following the RBI's swap facility that made overseas borrowing cheaper. Large private lenders, including HDFC Bank, Axis Bank, and ICICI Bank, have also raised funds through dollar bonds in recent months.
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