As per persons familiar with the situation, the State Bank of India has approached international banks about a potential $500 million fundraise via a worldwide bond offering, the timing of which has yet to be determined.
The country's largest lender is expected to formally engage investment banks next week for the proposed issue, which might be scaled up in size depending on investor response.
The issue's arrangers are anticipated to be European, Japanese, and American banks.
"SBI has made primary enquiries with foreign banks to raise around $500 million through the issuance of US dollar-denominated bonds under Reg S/144 A," stated a direct source. "This move comes as the bank looks to raise funds and keep a close eye on the upcoming FOMC (Federal Open Market Committee) meeting scheduled for the first week of May."
SBI got board approval to secure $2 billion through the issue of foreign currency bonds on April 18. It is likely to issue the bonds in tranches over the course of FY24.
Indian banks and non-bank financiers have been regularly tapping international markets for their funding needs over the years. Henceforth, with global benchmark rates to which the funding costs are tied moving up quite sharply from near zero levels not so long ago, issuers are having to pay proportionately more to raise funds from the international market.
On April 18, SBI received board clearance to raise $2 billion through the issuance of foreign currency bonds. The bonds will most likely be issued in tranches during the course of FY24.
Over the years, Indian banks and non-bank lenders have routinely sought money from international markets. With global benchmark rates, to which finance costs are linked, rising dramatically from near zero levels not long ago, issuers will have to pay proportionately more to raise funds from the international market in the future.
Reg S and Rule 144A permit companies to sell securities to investors in the United States and other countries without first registering with the Securities and Exchange Commission (SEC). According to persons acquainted with the subject, SBI can raise senior debt at a rate of 5% due to its quasi-sovereign status.