The State Bank of India (SBI), the largest lender in the country, successfully raised Rs 9,718 crore through its second infrastructure bond issuance. The bond was issued at a coupon rate of 7.70% and will be used to enhance resources for funding infrastructure and affordable housing projects.
The bond had a tenor of 15 years and received an overwhelming response from investors, with bids totaling Rs 14,805 crore and an oversubscription rate of 2.96 times the base issue. A total of 118 bids were received from a diverse range of investors, including mutual funds, provident and pension funds, and insurance companies.
Due to the positive response, SBI has decided to accept Rs 9,718 crore at a coupon rate of 7.70% payable annually for a tenor of 15 years. This represents a spread of 17 bps over the corresponding FBIL G-Sec par curve.
Previously, the bank had raised infrastructure bonds of Rs 10,000 crore on December 6, 2022 at a spread of 17bps over the corresponding FBIL G-Sec par curve. The bank has received AAA credit rating from domestic credit rating agencies for these instruments.
This issuance is notable as it is the first time any bank in India has issued a 15-year long-term infra bond. It will aid the bank in lending long-term funds for infrastructure projects. This issuance may also help to develop a long-term infra bond curve and encourage other banks to issue longer tenor bonds.
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