Thursday, July 26, 2012

SBI's $1 billion international bond issue opens

Mumbai, July 25: State Bank of India on Wednesday launched an international five-year bond sale programme to raise at least USD one billion. When contacted, SBI Managing Director and Group Executive for International Banking Hemant Contractor said that the bank on Wednesday launched its benchmark bond sale through book-building route.
"The issue is open and the details like pricing and the quantum of funds being mobilised will be known only by late night," Contractor said. A benchmark bond issue typically aims to raise more than USD 500 million. According to sources, the bond issue is of over USD 1 billion size with a five-year tenure.
The issue's investment bankers include Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, JP Morgan and UBS. SBI launched a marketing campaign for its benchmark bond issue on July 16 in Hong Kong, Singapore, London, New York, Los Angeles, Boston, Frankfurt and Zurich.
The bank has a board mandate to raise USD 10 billion from overseas markets over the next few years, and it has a headroom to raise nearly USD 7 billion more since it has raised USD 4 billion. The senior notes offering, which has been rated as 'BBB-' by Standard & Poor's, is a dollar-denominated issue. Giving the 'BBB-' rating on the SBI bond sale, S&P had earlier said this reflects the long-term counterparty credit rating on the bank. "The proposed notes will constitute direct, unconditional, unsecured, and un-subordinated obligations of SBI," S&P said.
SBI's move to raise overseas funds comes in the wake of the recent RBI steps to stem the falling rupee value and measures to encourage foreign debt inflows. Earlier, ICICI Bank and India Overseas Bank had initiated their respective dollar bond plans and had also hired investment bankers, but the offerings were delayed amid tough market conditions.
While Indian Overseas Bank was aiming to raise about USD 500 million, ICICI Bank was eyeing USD one billion through a bond sale. A slew of sovereign downgrades in the past few months have made it difficult for domestic companies to raise overseas debt. So far this year, a sum of USD 4 billion has been raised by two corporates -- USD 3.5 billion by Reliance Industries in two instalments in February and May, and USD 500 million by Axis Bank.
The fourth issue which is underway now, is again from RIL, to raise another USD 1.5 billion, for which market making meetings are beginning tomorrow in Singapore. However, domestic companies had raised over USD 8 billion through dollar bonds in 2011.


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