By Latest News
The proceeds of the bonds will be utilised in enhancing long-term resources for funding infrastructure and affordable housing segments. (Photo: Reuters)
State Bank of India (SBI), the country’s largest lender, raised Rs 10,000 crore through 15-year infrastructure bonds to fund projects in sectors like power and roads. The coupon rate for the bonds is fixed at 7.36 per cent.
The issue was oversubscribed by almost four times the base issue size of Rs 5,000 crore. Earlier, it had placed a 15-year infrastructure bond at a coupon of 7.49 per cent in September 2023 and raised Rs 10,000 crore.
This coupon of 7.36 per cent represents a spread of 21 basis points (bps) over the corresponding government bond curve.
The instrument is rated AAA with a stable outlook. With the current issuance, the total outstanding long-term bonds issued by the bank stand at Rs 49,718 crore, SBI said in a statement.
The proceeds of the bonds will be utilised in enhancing long-term resources for funding infrastructure and affordable housing segments. The board of the bank has already approved plans for raising up to Rs 20,000 crore through long-term bonds in the current financial year. Out of this, Rs 10,000 crore has been raised through the current offering.
The proceeds from infrastructure bonds are exempt from regulatory reserve requirements like Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). The entire amount can be deployed in lending operations. If banks were to raise similar amounts through deposits, they have to keep 4.5 per cent of the amount with the Reserve Bank of India as CRR. Also, they have to invest about 18 per cent of the money into securities to maintain SLR.
First Published: Jun 26 2024 | 3:52 PM IST