State Bank of India (SBI), the country’s largest lender, raised a total of ten thousand crores in its first infrastructure bond at a coupon rate of 7.51 per cent. According to the lender, it is the largest single infrastructure bond issued by any bank in the country.
According to an exchange filing, the funds raised through bonds will be used to improve long-term resources for funding infrastructure and the affordable housing segment.
“The tenor of these bonds is 10 years. The issue attracted overwhelming response from investors with bids of Rs. 16,366 crores, and was oversubscribed by about 3.27 times against the base issue. The issuance with 143 bids also demonstrates the confidence of the investor class. This also very clearly demonstrates the maturity of Indian investors in their selection of issuers of such instruments,” SBI said.
Based on the responses, the bank has chosen to accept a tenor of ten years at a coupon rate of 7.51 per cent payable yearly.
This represents a spread of 17 basis points over the comparable Government of India Security, indicating strong credit quality. For these securities, the Bank has received a AAA credit rating from domestic credit rating organisations.
SBI Chairman Dinesh Khara said that the “development of infrastructure is a key priority for the country and SBI, being the largest lender, has been in the forefront for advancement of social, green and other infrastructure projects. These long term bonds will help the bank in furthering the cause of infrastructure development”.
Meanwhile, in response to the Reserve Bank of India’s (RBI) retail e-rupee issuance on Thursday, the SBI chairman stated that the pilot retail-CBDC (central bank digital currency) is a game changer with long-term effects that should ensure better monetary transmission at a lower cost.