The State Bank of India (SBI) has successfully raised Rs 10,000 crore through 15-year infrastructure bonds aimed at funding projects in sectors such as power and roads. These bonds carry a fixed coupon rate of 7.36 percent. The issue attracted nearly four times the base issue size of Rs 5,000 crore in subscriptions.
Previously, in September 2023, the State Bank of India (SBI) issued a 15-year infrastructure bond with a coupon rate of 7.49 percent, raising Rs 10,000 crore.
The current coupon rate of 7.36 percent reflects a spread of 21 basis points (bps) over the corresponding Government bond curve.
According to SBI’s statement, the instrument holds a AAA rating with a stable outlook. Following this issuance, the total outstanding amount of Long-Term Bonds issued by the bank stands at Rs 49,718 crore.
SBI Chairman Dinesh Khara stated that this issuance will contribute to establishing a robust long-term bond curve and encourage other banks to issue bonds with longer tenures.
A total of 143 bids were received, reflecting broad participation across various types of mutual funds, including provident funds, pension funds, insurance companies, investors, and corporates.
The funds raised through these bonds will be directed towards bolstering long-term resources aimed at financing infrastructure and affordable housing sectors.
The bank’s board has approved plans to raise up to Rs 20,000 crore through long-term bonds in the current fiscal year, with Rs 10,000 crore already raised through the latest issuance.
Also Read: India Cements stocks
Proceeds from infrastructure bonds are not subject to regulatory reserve requirements such as Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). This allows the entire amount to be utilized for lending operations. In contrast, if banks were to raise similar amounts through deposits, they would need to maintain 4.5 percent of the total as CRR with the Reserve Bank of India and also invest approximately 18 percent in securities to meet SLR requirements.
Disclaimer: Stockeasynow provides stock market news for informational purposes only and should not be construed as investment advice. Readers are strongly encouraged to consult with a qualified financial advisor before making any investment decisions.
