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State Bank of India (SBI), the country’s largest lender, is planning to raise Rs 10,000 crore worth of infrastructure bonds during the current financial year.
“We inform that a meeting of the Executive Committee of the Central Board of State Bank of India is scheduled to be held on Tuesday, 29th November, 2022 to consider inter alia…to seek approval for raising of Infrastructure Bonds up to an amount of Rs 10,000 crores through a public issue or private placement, during FY23,” the bank informed exchanges on Thursday.
The planned issuance worth Rs 10,000 crore includes a greenshoe option of Rs 5,000 crore, the bank said.
The infrastructure bonds are likely to be of 10-year tenure, sources told Business Standard.
“SBI is planning to raise 10 years infrastructure rated AAA from ICRA and India Ratings for a quantum of 5,000 crore plus 5,000 crore total of 10,000 crore,” a source said.
“There will be very aggressive demand for the SBI bonds; it could be around 10 basis points above the annualised yield of the 10-year government security. It could be around 7.60-7.65 per cent – that is where the REC bonds are currently. Also, it’s an infra bond, so typically if an insurance company wants something from the infra category they would go for SBI,” the source said.
Raising money through infrastructure bonds has advantages for banks as a part of the funds do not need to be set aside for Statutory Liquidity Ratio or the Cash Reserve Ratio as is the case for normal deposits.
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