SBI raises Rs 10,000 crore from infra bonds at 7.49% coupon rate; stock stays flat

Shares of State Bank of India showed little change in early trade on September 25 even after the lender announced raising Rs 10,000 crore from infrastructure bonds.

At 9:31am, the SBI stock was trading at Rs 599 on the NSE, up 0.1 percent from the previous close.

The country’s largest lender has raised Rs 10,000 crore at a coupon rate of 7.49 percent through its fourth infrastructure bond issuance. The investors were from provident funds, pension funds, insurance companies, mutual funds, corporates, and so on. The proceeds of bond issue will be utilised in enhancing long-term resources for funding infrastructure and the affordable housing segment, SBI said in a BSE filing on September 22.

The issue attracted an overwhelming response from investors with bids of Rs 21,045.10 crore and was subscribed more than five times against the base issue size of Rs 4,000 crore.

“The total number of bids received was 134, indicating a wider participation. The investors were across provident funds, pension funds, insurance companies, mutual funds and corporate houses. The proceeds of bonds will be utilized in enhancing long-term resources for funding infrastructure and the affordable housing segment,’’ SBI said.

The bank had raised long-term bonds of Rs 10,000 crore on August 1 and Rs 9,718 crore on January 19.

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The bank has an ‘AAA’ credit rating with a stable outlook from all domestic credit rating agencies for these instruments. With the current issuance, the total outstanding long-term bonds issued by the bank stands at Rs 39,718 crore.

The issuance is very significant as it has been successful in raising long-duration bonds successively at a finer spread. “We believe that this issuance may help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor,’’ it said.

In June, the lender had said it will raise up to Rs 50,000 crore through debt instruments from domestic as well as overseas markets in the current fiscal. SBI had reported its highest-ever quarterly profit at Rs 16,884 crore in the April-June quarter.

Brokerage views

Brokerage firm LKP Securities has given a 12-month target price of Rs 743 for the State Bank of India stock in a research report dated August 7. The report further stated: “The bank has delivered the highest ever quarterly profit and 15 percent credit growth which is in line with guidance for FY24.”

Stock performance

State Bank of India stock has given a return of 17.36 percent over the last six months. The benchmark Bank Nifty index has given a return of 13.14 percent over the same duration.

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