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SBI raises ₹9700cr via second tranche of infrastructure bonds

January 19, 2023

SBI raises ₹9700cr via second tranche of infrastructure bonds
State Bank of India (SBI), the country’s largest lender, raised ₹9,718 crore through the issuance of 15-year infrastructure debt on Wednesday, with the bonds bearing a coupon of 7.70 per cent.

The coupon is the rate of interest that is periodically paid out to investors. The investors included mutual funds, provident and pension funds and insurance companies, SBI said through a release.

“The fund proceeds will be utilized in enhancing long-term resources for funding infrastructure and the affordable housing segment. The issue attracted an overwhelming response from investors with bids of ₹14,805 crores and was oversubscribed by ₹2.96X against the base issue,” SBI said. The bank receives a total of 118 bids for the bond sale.

SBI’s latest bond sale marks the first time an Indian bank has issued infrastructure bonds with a tenure of 15 years. The bank said that the sale would aid in the development of a long-term infrastructure bond curve and encourage banks to issue such debt for longer maturities.

The coupon rate of 7.70 per cent represents a spread of 17 basis points over the corresponding government security yield curve provided by the Financial Benchmarks of India Limited, SBI said.

Prior to the latest bond sale, SBI had issued 10-year infrastructure bonds worth ₹10,000 crore at a coupon of 7.51 per cent on December 6, 2022.

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