State Bank of India (SBI) has successfully raised ₹10,000 crore through its sixth issuance of long-term infrastructure bonds, featuring a coupon rate of 7.36%. This move marks a significant step in bolstering funding for infrastructure and affordable housing projects across the country.
Overwhelming Response
The bond issuance received an overwhelming response from the market, with bids exceeding ₹18,145 crore, oversubscribing the base issue size of ₹5,000 crore by approximately 3.6 times. The total number of bids reached 120, coming from a diverse range of investors including provident funds, pension funds, insurance companies, mutual funds, and corporates.
Utilization of Proceeds
The bonds have a maturity period of 15 years. SBI plans to use the proceeds to enhance long-term resources dedicated to funding infrastructure and affordable housing segments. This strategic move aims to support the development of critical infrastructure and housing projects, contributing to the country’s economic growth.
Encouraging Long-Term Investments
Dinesh Khara, Chairman of SBI, emphasized the broader impact of this issuance, stating, “This issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.” By setting this precedent, SBI aims to foster a more robust market for long-term investments, benefiting the overall financial ecosystem.
Current Bond Issuance Status
With this recent issuance, SBI’s total outstanding long-term bonds now stand at ₹59,718 crore. This figure underscores the bank’s commitment to leveraging bond markets for raising substantial capital for long-term projects.
Infrastructure Sector Focus
As of March 31, 2024, SBI’s total loan outstanding to the infrastructure sector amounted to ₹3,94,681 crore. This constitutes 12.23% of the bank’s total domestic advances, highlighting the significant role infrastructure financing plays in the bank’s lending portfolio.
Conclusion
SBI’s successful bond issuance not only underscores the bank’s strength and market confidence but also paves the way for future long-term financing initiatives in India’s critical infrastructure and housing sectors. This strategic financial move aligns with SBI’s mission to support the nation’s development through robust and sustainable funding solutions.