By Dharamraj Dhutia
MUMBAI (Reuters) -State Bank of India plans to raise funds by issuing dollar-denominated bonds maturing in five years, three merchant bankers said on Tuesday, days after S&P Global Ratings upgraded India’s sovereign credit rating for the first time in 18 years.
The country’s largest lender by assets is eyeing at least $500 million through the issue, and based on the response, could go as high as $1 billion, one of the bankers said.
SBI is seeking bids and will finalise the pricing and quantum this week, the bankers added.
“We have already seen a very strong investor interest, and expect a finer pricing than previous issue,” one of the bankers said.
SBI did not reply to a Reuters email seeking comment. The bankers requested anonymity as they are not authorised to speak to media.
The lender provided an initial guidance of U.S. Treasury yield plus a spread of 105 basis points, but the bankers feel the actual cutoff may come below 100 bps as the issue is set to receive strong demand.
The notes will be rated ‘BBB’ by S&P, in line with the issuer’s ratings.
Last month, the global rating agency upgraded India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-‘.
Yields on the dollar bonds of SBI, widely considered as a so-called quasi-sovereign issuer with credit ratings closely linked to the sovereign rating, had dropped after the upgrade, and will benefit the lender for fresh fundraising.
More favourable placement opportunities are arising for state-linked entities and a broader category of banks and non-banking finance companies, said Maksim Zenkov, deputy head of emerging markets fixed income at financial data aggregator Cbonds.
“The upward trend in the government bond yields serves as an additional stimulus to consider tapping the dollar debt market.”
In November 2024, SBI raised $500 million through five-year dollar bonds at a yield of 5.13%, which was at a spread of 82 bps over Treasury yield with similar maturity, the tightest spread achieved by the lender, per bankers.
(Reporting by Dharamraj Dhutia; Editing by Eileen Soreng and Janane Venkatraman)
