State Bank of India (SBI), the country's largest government-owned corporation by market capitalization, announced on Monday that it expects to raise up to $2 billion through overseas bond sales in Financial Year 2024, surpassing last year's foreign fund-raises by three of its closest private-sector rivals, including HDFC Bank.
SBI’s board of directors will meet on April 18 to discuss raising funds through the sale of senior unsecured notes. SBI is anticipated to issue these bonds to foreign investors in a variety of tranches.
The instruments can be valued in any currency, including the US dollar, even as global discussions over the US’s future interest-rate trajectory and the expected path of the world’s reserve currency through a year of moderate global growth at best heat up.
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SBI, which accounts for about one-fifth of all outstanding bank loans in the country, told stock exchanges late Monday that it will investigate the situation and identify the best way to raise long-term funds, which might be through debt or equity offerings.
According to debt-market analysts, the largest private-sector lenders, including HDFC Bank, ICICI Bank, and Axis Bank, typically issue offshore bonds worth $1 billion or less per fiscal year. According to them, no private sector lender’s bond issuances exceeded a billion dollars in FY23.
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SBI raised one of the largest syndicated social loans in Asia-Pacific in February, raising over $1 billion. This transaction includes a $500 million initial issuance as well as an extra $500 million via a greenshoe option. SBI funded a social loan for forward lending to green solutions for the first time, with the loan book closing on February 24.
The yield on 2-year US Treasury bonds is 4%, while the yield on 10-year bonds is 3.426%. Despite the global bond market’s volatility, SBI is likely to capitalize on investors' enthusiasm in bonds issued by strong state-run firms that are deemed quasi-sovereign from an investing standpoint.
