[sbinews] Tightly priced bond issue from SBI (Financial Times, London)

  • From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Tue, 7 Dec 2004 11:11:13 +0530

Tightly priced bond issue from SBI
(Financial Times, London)
By Khozem Merchant in Mumbai
Published: December 6 2004 20:13 | Last updated: December 6 2004 21:47

State Bank of India has unveiled a $1bn bond issuance programme designed to
support the global business ambitions of India's largest banking group.

The fundraising comes amid increasing signs of a stronger perception of
Indian credit as companies from the country tap international capital
markets to fund their overseas expansion.
The first tranche under SBI's medium-term notes programme was a $400m
fixed-rate international bond, the largest ever from India. Bankers and SBI
officials described the five-year bond as a "landmark" because of its tight
pricing, which was one basis point higher than the government of India would
achieve with its sovereign rating. Moody's Investors Service, rates India at
the lowest investment grade of Baa3.
The offering was aimed at offshore US accounts and investors in Europe and
Asia, and was subscribed more than three times, persuading the bank to
increase the size by $100m.
The bonds were priced to yield 117.5bp over five-year US Treasuries, more
favourable by about 16bp than that achieved by the most recent Indian
international benchmark, a $250m offering this year by Export-Import Bank.
"Our strong balance sheet has been noticed by global investors and we have
been rewarded with fine pricing," said Mr AK Purwar, chairman of SBI.
State-owned SBI, which accounts for about 80 per cent of India's
public-sector banking assets, plans another issue of similar size within two
months, when it hopes also to have completed the acquisition of a
medium-sized bank in an emerging market, said Mr Purwar.
SBI's international assets of $10bn are forecast to grow by at least a
quarter this year, he said.

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