The State Bank of India (SBI), the country’s largest lender, has raised $500 million through 5-year dollar-denominated bonds, securing the lowest-ever borrowing cost achieved by an Indian issuer. The bonds were priced at just 75 basis points above US Treasury yields, translating into a coupon rate of 4.5%.
Boost from India’s Sovereign Rating Upgrade
The issuance comes shortly after Standard & Poor’s upgraded India’s sovereign credit rating from ‘BBB-’ to ‘BBB’, boosting investor confidence and helping tighten SBI’s bond spreads in the secondary market by nearly 9 basis points. The improved rating environment allowed SBI to lock in more competitive funding terms compared to previous issuances.
Strong Investor Demand
Investor appetite remained robust, with the issue receiving over $1.1 billion in orders from 85 accounts across Asia, West Asia, and Europe. Despite the oversubscription, SBI stuck to its fundraising target of $500 million.
Remarks from SBI and HSBC
SBI Chairman Challa Sreenivasulu Setty said the deal demonstrates global confidence in India’s economic growth and SBI’s credit strength. He noted that the record pricing sets a new benchmark for Indian issuers in global capital markets.
Commenting on the transaction, Siddharth Sharma of HSBC India highlighted that the deal reflected India’s strong financial system and investor trust, with spreads tightening by 30 basis points during the book-building process.
Comparison with Previous Issues
SBI’s latest fundraising marks a significant improvement over past deals. The bank raised $500 million in November 2024 at T+82 bps and $600 million in January 2024 at T+117 bps, making the current deal the most competitively priced dollar bond issuance in its history.
Summary
The State Bank of India (SBI) has successfully raised $500 million through 5-year dollar bonds at a record-low coupon of 4.5%, reflecting strong investor demand after India’s sovereign rating upgrade. The issue was oversubscribed with $1.1 billion in orders, but SBI retained its target. Compared to past fundraisings, this deal sets a new benchmark for Indian issuers in global markets, underscoring rising investor confidence in India’s growth story.
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