SBI Plans $10 Billion Dollar Bond Issuance for Capital Raise

State Bank of India (SBI), India’s largest lender, is actively seeking to raise capital through a five-year US dollar-denominated bond offering. The ultimate amount of funds raised will be contingent on the bank’s ability to reduce the initial price guidance.

This initial price guidance currently stands at 120 basis points above the benchmark US Treasury yield. The fundraising will occur in multiple tranches, each valued at $250 million, and is part of SBI’s broader $10-billion medium-term note programme.

Key Details of the Offering

The notes, which are being priced on Tuesday, are slated to mature on August 18, 2031. They will be issued as Reg S, senior unsecured securities.

The capital generated from this bond issue is designated for general corporate purposes. It will also fulfill the funding requirements of SBI’s international offices and branches.

Purpose and Investor Protections

A key feature of these bonds is an investor put option, exercisable at 101 percent. This option can be triggered if the Indian Government’s combined direct and indirect shareholding in SBI falls below 51 percent.

A consortium of prominent financial institutions is serving as joint bookrunners and joint lead managers for this offering. These institutions include BNP Paribas, Citigroup, Crédit Agricole CIB, Emirates NBD Bank, HSBC, MUFG, and Standard Chartered Bank.

Facilitating International Fundraising

The bonds are intended for listing on three exchanges: the Singapore Exchange, NSE International Exchange, and India International Exchange.

This move by SBI follows a broader trend among major Indian banks, which have increasingly accessed the dollar bond market since June. This surge in overseas fundraising has been facilitated by the Reserve Bank of India’s (RBI) operationalization of a concessional swap window.

The RBI’s swap window subsidizes a portion of the hedging costs. This makes it more economical for banks to raise funds internationally.

Market Participants and Previous Issues

Other significant Indian lenders, such as HDFC Bank, Axis Bank, and ICICI Bank, have also successfully raised substantial amounts through dollar bonds recently. Separately, SBI has already secured $600 million through a private placement of three-year dollar bonds at a spread of 100 basis points over the Secured Overnight Financing Rate (SOFR) since June.