SBI raises Rs 10,000 crore through 15-year infrastructure bonds

1 Aug 2023 , 12:47 PM

The State Bank of India completed the sale of infrastructure bonds worth Rs 10,000 crore on Monday, despite strong investor demand. The country’s largest lender may use the same vehicle for its next round of debt fundraising, which might take place in the current quarter.

According to a press release, the bank sold the 15-year infrastructure bonds on Monday with a rate of 7.54%, marking an aggressive spread over the similar government security curve of such a tenure.

According to news reports, the total bids received at the 7.54% point were Rs 19,728 crore, while the overall bid book was Rs 21,968 crore. The debt issuance spread was 13 basis points on the 15-year curve, the smallest such gap.

‘The spreads based on the par curve that FBIL (Financial Benchmarks of India) creates are based on the par curve as of the previous day’s close.’ SBI’s newest infra bond offering had the narrowest spread over that ever. They will most likely aim for another infrastructure bond offering, possibly this quarter. ‘A wide range of investors have expressed strong interest in infra bonds,’ a news report added.

SBI’s current sale is only the second time a bank has issued 15-year infrastructure bonds. In January, SBI issued infrastructure bonds worth Rs 9,718 crore for the same term. That issuance had a spread of 17 basis points.

Infrastructure bonds are long-term debt products with at least a seven-year maturity. Because these instruments are used to finance the infrastructure sector, banks are exempt from the Reserve Bank of India’s cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements.

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