State Bank of India is set to raise $225 million from the overseas market this year by issuing perpetual bonds. The overseas issue opened on Monday and the bank is expected to price the bonds this week. The bank has appointed Citibank and JP Morgan Chase as merchant bankers to the issue.
The bank plans to raise a total of Rs 15,000 crore this year in the form of equity (tier-I) and debt (tier-II). The proposed issue, perpetual note, will be the first tranche of its tier-I borrowing this year. If the SBI Act is amended, the bank plans to raise close to Rs 6,000 crore by way of public issue. The balance would be raised from the debt market.
In February this year, SBI had raised $400 million by way of perpetual bonds at 6.43% and it had a call option in 2017. The proposed perpetual note, too, would have a call option at the end of 10 years. The proposed borrowing is a part of SBI’s $5 billion MTN issuance and is likely to be raised at 1.3-1.4% over Libor, which is now ruling at 6.6-6.7%.
Read more in The Economic Times article.
International rating agency Standard & Poor’s has assigned a ‘BB’ rating to the bank’s $225 hybrid issue. The rating of BB is sub-investment grade. However, the senior secured borrowing has been rated at BBB-, which is an investment grade.
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