State Bank of Indias $1 billion bond offering got a strong response from global investors. The issue was oversubscribed 4.3 times despite a low coupon rate of 3.25 per cent. The SBI issue is the cheapest in history not only for the bank but also for the domestic companies,investment bankers said.
The SBI issue is the thirteenth foreign issue from an Indian company since January. Indian paper has mopped up $7.5 billion from overseas markets in this year which is 75 per cent of what the companies raised in the entire calendar year 2012.
SBI has successfully sold $1 billion senior unsecured bonds,denominated in US dollars and having a tenor of five years at a coupon of 3.25 per cent,to over 250 international investors, the lender said in a statement on Friday evening.
The bank said these bonds,maturing in April 2018,are the third US dollar bond issuance after the $1.25 billion raised last July and another $1 billion in July 2010 as part of its $10 billion medium term note programme.
SBI is very pleased the transaction received such success. Strength of the order book and the fine pricing reflects the level of investor confidence in the SBI credit, SBI chairman Pratip Chaudhuri said.
BNP Paribas,Citigroup,Deutsche Bank,HSBC,JP Morgan,and SBI Capital Markets acted as joint lead managers for the issue.
The coupon on the latest bond sale by SBI is 150 basis points lower than the one it is paying for its five-year unsecured bonds sold last July,when it raised $1.25 billion at 3.75 per cent.
The offering was priced at a spread of 255 bps over the 5-year US treasury bills,equivalent to a price of 99.904 per cent and yield of 3.271 per cent per annum. The bonds are denominated in US dollar,and will a bear fixed interest of 3.250 per cent per annum. The notes will mature on April 18,2018, Hemant Contractor,SBI managing director and group executive (International Banking),said.