State Bank of India Plans $1.5 Billion Dollar Bond Sale

State Bank of India is planning to launch a second dollar bond sale this fiscal year, aiming to raise up to $1.5 billion. The sale comes as the US Federal Reserve is expected to raise interest rates later in the year, providing an opportunity for the bank to borrow at a lower cost. The bank is in talks with five global banks, including Bank of America and Citigroup, to facilitate the bond sale.

Key Takeaways:

• State Bank of India plans to raise up to $1.5 billion through its second dollar bond sale this fiscal year.
• The sale aims to take advantage of the current window of low interest rates before the US Federal Reserve raises rates later in the year.
• The bank has engaged with five global banks, including Bank of America, Citigroup, Barclays, Standard Chartered, and BNP Paribas, to facilitate the bond sale.
• A previous bond sale by SBI in April was successful, raising $1.25 billion through five-year bonds priced at 205 basis points over US treasuries.
• Indian debt is attractive to investors due to high yields, with SBI's dollar bonds offering a yield of about 8% compared to 2% in developed markets.
• However, investors are increasingly seeking protection against currency risks and defaults, tightening covenants when picking up junk bonds.

Statistics:

• SBI aims to raise up to $1.5 billion through its second dollar bond sale.
• The previous bond sale by SBI in April raised $1.25 billion at a yield of 205 basis points over US treasuries.
• Indian debt yields an average of 8%, compared to 2% in developed markets.
• The US Federal Reserve may raise interest rates later in the year, providing an opportunity for SBI to borrow at a lower cost.
• Foreign investment in Indian government bonds is restricted at $30 billion, and corporate bonds at $51 billion.

Sources:

• State Bank of India officials, as quoted by The Economic Times.
• Moody's rating report, as mentioned in The Economic Times.
• The Economic Times, April 2023 (no specific date given).