State Bank of India raised Rs 10,000 crore through infrastructure bonds at an interest rate of 7.49%. This is the fourth infrastructure bond issuance by the state-owned bank.
The bond issue has been subscribed more than five times with 134 bids received worth Rs 21,045 crore as against the base issue size of Rs 4,000 crore. Investors include provident funds, pension funds, insurance companies, mutual funds and corporations.
SBI said in a release that it will use the proceeds from the issue to enhance long-term resources for funding the infrastructure and affordable housing sectors.
Previous bond issuances
Prior to this, SBI had raised Rs 3,101 crore through Additional Tier 1 (AT-1) bonds in July 2023 and Rs 10,000 crore through 15-year long-term infrastructure bonds. After this issuance, the total outstanding long-term bonds amounted to Rs 39,718 crore.
“This issuance is also important as the bank has successfully issued long-dated bonds at tighter spreads on a continuous basis. We believe this issuance may help shape the long-dated bond curve and encourage other banks to issue bonds with longer maturities. ”
Market borrowing by banks has increased significantly since June 2024, as PSUs and private banks have sought to tap the market with long-term bonds to shore up capital and support lending. Higher yields also ensure strong demand for such bonds, with investors looking to lock up their funds at higher levels.
Earlier this fiscal, Kotak Mahindra Bank raised Rs 1,895 crore through a seven-year infrastructure bond at an interest rate of 7.55 per cent, IDFC First Bank raised Rs 1,500 crore through a 10-year Tier II bond at an interest rate of 8.40 per cent, Punjab State Bank raised Rs 1,500 crore at an interest rate of 8.40%. Rs 3,090 crore was issued through secondary bonds at an interest rate of 7.74%.
In the coming week, PNB is expected to raise up to Rs 3,000 crore through AT-1 bonds, while Canara Bank is expected to raise up to Rs 5,000 crore through 10-year infrastructure bonds, market sources said.