|Chennai||Rs. 24470.00 (1.37%)|
|Mumbai||Rs. 24900.00 (0.97%)|
|Delhi||Rs. 24200.00 (1.26%)|
|Kolkata||Rs. 24160.00 (0%)|
|Kerala||Rs. 24000.00 (0.63%)|
|Bangalore||Rs. 23800.00 (0%)|
|Hyderabad||Rs. 24140.00 (1.17%)|
State Bank of India planned to raise at least $500 million through a five-year foreign bond sale as soon as this month, two sources with direct knowledge of the matter said, potentially reopening the dollar bond market for Indian issuers after a lull of four months.
The country’s biggest lender had hired Citigroup, Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank, JPMorgan and UBS for the issue, said the sources, declining to be named, as the process was not public yet.
SBI, which last sold foreign bonds in early 2011, would launch the issue depending on market conditions, and was working out a schedule for investor meetings, the sources said. A senior SBI official associated with fund raising said demand from Indian companies was building up.
The spreads in international markets have softened after decisions to aid the banking sector was taken by European Union finance ministers at a meeting last week.
“It is early to say the exact amount that would be raised now. Our cost of overseas funds would slightly come down, giving the bank room to price credit at fine rates,” he added.
Another SBI official pointed out RBI had allowed Indian companies to borrow in dollars to retire rupee loans.
This was one of the steps taken to attract foreign funds into the country and should help check the sharp fall in the value of the rupee, he said
In the past few months, Indian companies have refrained from issuing dollar bonds as a surge in risk aversion has made it more expensive for them to come to the market.
In March ICICI Bank, the country’s biggest private-sector lender, hired four banks for a dollar bond issue but has not launched the deal, as volatility in the Euro zone put the brakes on deal flows.
The last two dollar bond sales from India were in February, when energy conglomerate Reliance Industries raised $1 billion, followed swiftly by Axis Bank, with a $500 million issue.
SBI raised its deposit rates at the weekend suggesting costs of funds will remain elevated for banks, helping to make foreign borrowing attractive as cash in the domestic banking system cash is expected to remain tight.
SBI was downgraded in October by Moody’s Investor Service, which cited a thin capital base and worsening asset quality.
The Indian government pumped Rs 7,900 crore ($1.41 billion) into the bank in March and higher profits helped it boost its capital adequacy ratio.
In June, SBI Chairman Pratip Chaudhuri told reporters the lender planned to raise $1-$2 billion from foreign markets in the next three months.
SBI officials were not immediately reachable for comment.
Earlier this year, state-run Indian Overseas Bank picked seven banks to raise $500 million through bonds from the overseas markets.
Indian companies including Union Bank of India, UCO Bank, Jindal Steel and Power and Power Finance Corp are also looking to issue dollar bonds, sources have said.