State Bank of India (SBI) raised INR 100,000 million at a coupon rate of 7.54% through its third infrastructure bond issuance, bidding for which took place on July 31, 2023. The proceeds of bonds will be utilized in enhancing long term resources for funding infrastructure and affordable housing segment. The tenor of these bonds is 15 years.

This is the first issuance of long term bond by any bank for this tenor in the current financial year. The issue attracted overwhelming response from investors with bids of INR 216,980 million and was oversubscribed by 4.34 times against the base issue size. The total number of bids received were 115 indicating wide participation.

The investors were across provident funds, pension funds, insurance companies, mutual funds, corporates etc. Based on the response, the Bank has decided to accept INR 100,000 million at a coupon rate of 7.54% payable annually for a tenor of 15 years. This represents spread of 13 bps over the corresponding FBIL G-Sec par curve.

This issuance is also very significant as despite the recent hardening of yields, the Bank has been successful in raising 15 years Long Term Bond successively at a finer spread and it will help the Bank in lending long term to infrastructure. The bank believe that this issuance may help in developing a long term bond curve and encourage banks to issue bonds of longer tenor.