State Bank of India (SBI) collected Rs 10,000 crore on Monday through 15-year infrastructure bonds at a coupon rate of 7.23%, bringing the total amount raised through these long-term instruments to Rs 30,000 crore for the current fiscal year.
The coupon is a little bit greater than what the market players anticipated. According to sources, they had estimated it to be between 7.15 and 7.20 percent because of the continued high demand for longer-tenor papers in recent offers on the domestic capital market.
"This fiscal year, SBI issued a third tranche of infrastructure bonds with an aggressive cut-off rate of 7.23%. Long-term corporate bond investors in India have a strong appetite, as seen by the spread of only about 18 basis points over matching sovereign government bond yields. In the current fiscal year, SBI has effectively raised Rs 30,000 crore through infrastructure bonds with this tranche," according to Venkatakrishnan Srinivasan, managing partner and founder of Rockfort Fincap LLP.
He added that SBI's emphasis on fostering credit growth has led the bank to investigate funding options in both domestic and foreign markets. He said that despite the substantial supply of these instruments, the demand for such premium credit securities is still strong, indicating investors' faith in SBI's credit quality and the general stability of the bond market.
In the current fiscal year (FY25), SBI has already raised Rs 20,000 crore through infrastructure bonds. The state-owned lender raised Rs 10,000 crore at a 7.36% interest rate in June of this year through 15-year infrastructure bonds. It has also raised an additional Rs 10,000 crore at the same rate using 15-year bonds.
SBI has stated in its most recent Q2 earnings that they would issue or place private long-term bonds during FY25 up to the remaining Rs 20,000 crore. According to the bank, it raised Rs 10,000 crore in July-September (Q2FY25) through the issuance of long-term bonds and Rs 15,000 crore through Basel III compliant Tier 2 Bonds in the form of debentures.
State-owned REC issued 15-year bonds earlier this month at a tight price of 7.09 percent in order to raise Rs 3,000 crore. Additionally, by issuing bonds with a 15-year maturity and a coupon rate of 7.14 percent, the Indian Railway Finance Corporation (IRFC) has raised Rs 1,415 crore.
