SBI Seeks $500 Million+ via Dollar Bonds Amid Market Optimism
- SBI plans $500 Million -$1Billion five-year dollar bond issue following India’s sovereign credit rating upgrade by S&P.
- Initial guidance at Treasury yield +105 bps, but strong demand may push the final yield below 100 bps.
- Bonds rated ‘BBB’, benefiting from lower yields after the sovereign upgrade, creating favorable fundraising conditions.
State Bank of India (SBI), the country’s largest lender by assets, is planning to raise funds by issuing dollar-denominated bonds with a maturity of five years, three merchant bankers told. The move comes shortly after S&P Global Ratings upgraded India’s sovereign credit rating for the first time in 18 years in August.
SBI is initially targeting at least $500 million through the bond sale, but based on market demand, the issue could be increased up to $1 billion, one banker said. The final details of the bond issue are expected to be decided in the coming days.
The lender has provided initial guidance of U.S. Treasury yield plus a spread of 105 basis points. However, bankers believe the final yield could come in below 100 basis points, as strong demand is expected. The bonds are likely to be rated 'BBB' by S&P, matching SBI’s current credit rating.
Last month, S&P upgraded India’s long-term sovereign rating from 'BBB' to 'BBB', which has already led to a drop in yields on SBI’s dollar bonds. As a result, the lender is expected to benefit from favorable conditions for raising fresh funds.
Maksim Zenkov, deputy head of emerging markets fixed income at Cbonds, noted that the rise in government bond yields is creating new opportunities for state-linked entities and a wider range of banks and non-banking finance companies to tap the dollar debt market.
In November 2024, SBI had raised $500 million through five-year dollar bonds at a yield of 5.13%, with a spread of 82 basis points over similar-maturity U.S. Treasury yields, marking its tightest spread for dollar bonds to date.
This planned issuance underscores SBI’s strategy to leverage strong investor interest and favorable market conditions following India’s sovereign credit rating upgrade, strengthening its position in international debt markets.
