SBI Likely To Raise Up To Rs 10,000 Crore Via Infra Bonds In June—Exclusive
The bank will most likely go for an infrastructure bond issue in June, which would be after the Reserve Bank of India's Monetary Policy Committee meeting, a person involved in the transaction said.
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India's largest lender State Bank of India plans to tap the debt market with infrastructure bond issuance worth up to Rs 10,000 crore in June, two merchant bankers aware of the development told NDTV Profit.
The state-owned bank is looking to issue infrastructure bonds maturing in 15 years.
The bank will most likely go for an infrastructure bond issue in June, which would be after the Reserve Bank of India's Monetary Policy Committee meeting, a person involved in the transaction said, adding they have started the process of the bond issue.
The rate-setting panel will meet in June from 4th to 6th, with economists expecting another round of cut in repo rate by 25 basis points.
However, details are yet to be finalised. An email sent to SBI seeking a response on the matter was left answered at the time of filing this story.
The infrastructure bond issuance is likely to have a base size of Rs 5,000 crore and a greenshoe option of Rs 5,000 crore.
The bank is looking to issue these infra bonds in the range of 6.85-6.90%, the person said.
In the financial year ended March 31, SBI issued three batches of 15-year infrastructure bonds and raised Rs 30,000 crore. The state-owned bank had also raised Rs 10,000 crore each through tier-I and tier-II bonds.
For the quarter ended March, SBI's infrastructure book grew nearly 0.7% year-on-year to Rs 3.97 lakh crore.
Gross advances grew at a healthy pace of 12.03% on year to Rs 42.20 lakh crore during the quarter, but the pace of deposit growth lagged behind at 9.48%. The deposits stood at Rs 53.82 lakh crore at end of the quarter.
Banks and financial institutions raise funds through infrastructure bonds to finance their long-term infrastructure projects. These bonds have a minimum maturity of seven years and are eligible for some regulatory exemptions, such as mandatory requirements of statutory liquidity ratio and cash reserve ratio. Affordable housing loans also qualify for lending against infrastructure bonds.
