SBI Secures Record $1 Billion Syndicated Loan, Largest Sole Underwritten Loan in India Since 2018

3 Jan 2024 , 10:29 AM

State Bank of India (SBI) recently secured a $1-billion syndicated loan, marking the largest such transaction in recent years through its GIFT city branch.

The funds were raised through two tenures: a three-year loan and a five-year one, with interest rates set at 80 basis points and 100 basis points over the secured overnight financing rate (SOFR) for each tenure, respectively.

SOFR, a benchmark rate for dollar-denominated derivatives and loans, has replaced the London Interbank Offered Rate (Libor).

Originally planning to raise $250 million under each tenure, SBI revised the amount to $500 million due to strong interest. The loan is entirely underwritten by HSBC, making it the largest sole underwritten loan by an Indian bank since at least 2018.

HSBC India’s CEO, Hitendra Dave, emphasized SBI as a proxy for India’s growth story, highlighting widespread interest among lenders from the Middle East, Europe, and Asia participating in the syndicated loan.

The funds raised will be utilized for long-term loan growth and liabilities management, emphasizing the increasing importance of SBI’s GIFT city branch for long-term fundraising needs.

SBI’s Managing Director, CS Setty, expressed confidence in the bank’s balance sheet, citing the transaction’s pricing as the best available rate for such a substantial amount and marking it as the largest single underwritten loan from India.

The syndicated loan follows SBI’s previous $1 billion raised in February through a syndicated social loan facility, focused on funding environmental, social, and corporate governance assets.

As of September 30, SBI reported a 12.4% year-on-year increase in gross advances to over Rs 34 lakh crore, while deposits reached nearly Rs 47 lakh crore, up 12% year-on-year.

Financial indicators for the second quarter include a 12% rise in net interest income to Rs 39,500 crore, a 10% increase in fee income to Rs 6,536 crore, a gross non-performing asset ratio of 2.55%, and a net non-performing asset ratio that fell to 0.64%.

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