Money Management

State Bank of India plans to raise up to $ 1.5 billion through foreign bonds in fiscal year 21

The State Bank of India plans to raise long-term funds – up to $ 1.5 billion – through international market bonds in FY21.

The central council executive committee will meet on June 11 to review the situation and decide on fundraising plans.

SBI may raise funds through a public offering and / or private placement of senior unsecured notes in dollars or any other convertible currency, during fiscal year 21, he said. declared.

Bankers associated with international fundraising said lenders, including SBI, regularly raise funds in global markets. The proceeds are used for the loan and repayment of financial instruments maturing in that year.

In addition to borrowing in the market, it also uses bilateral agreements and uses multilateral agencies to raise funds.

Last month, state-owned REC – which funds the electricity sector – raised $ 500 million through the issuance of foreign bonds. This was the very first overseas bond issue by an Indian company during the Covid-19 crisis. The Notes (Bonds) will mature on May 19, 2023 and all principal and interest payments will be made in dollars.

In March, SBI had raised $ 100 million via variable rate notes (green bonds) at a 3-month coupon at the London Interbank Offered Rate (LIBOR), plus 80bp. The bonds were issued through the London branch of SBI, to be listed on the Singapore SGX. SBI already has two Climate Bond Initiative certified green bond issues, totaling $ 700 million.

SBI’s portfolio of loans to foreign offices stood at more than $ 40 billion at the end of December 2019, while deposits exceeded $ 15 billion, according to the presentation of the third quarter of fiscal 2020 results.

According to the SBI’s annual report for FY19, it sanctioned foreign currency loans to the tune of $ 12.91 billion to Indian companies and $ 10.36 billion to foreign entities.

In the energy sector, SBI has actively funded oil marketing companies for their working capital needs after the recent special waiver, which is of significant strategic importance to India, both in terms of increasing India’s energy security amid volatile crude and forex prices.

In addition, in the electricity sector, the lender has provided external commercial loans (ECBs) to companies in the electricity sector and finance companies that on-lend to the sector.

The bank has helped companies with their growth strategies, including new businesses, by arranging foreign currency debts through ECBs. This support is provided through unionized agreements, in collaboration with other Indian and foreign banks, and through bilateral agreements.

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