SBI raises $300 million via perpetual bond sale

MUMBAI: State Bank of India, the country's largest lender, raised $300 million by selling perpetual bonds overseas, falling short of target as investors sought higher interest rates. The offshore perpetual bonds the first to be issued by an Indian bank are aimed at shoring up SBI's capital base and bolstering its loss-absorption capacity .

The proceeds were lower than the initial target size of $500 million as overseas investors bid for higher rates, which the bank declined to oblige after comparing them with domestic borrowing costs.

The securities yielded 5.5% with a five-year call option that allows the bank to withdraw the issue after the stipulated period, two people with knowledge of the matter told ET.

“The bond sale has just set a benchmark as the rate was quite competitive. The bank chose to limit it at $300 million as it has seen higher demand for domestic bond investors,“ one of the people said.The bonds will be listed on the Singapore Stock Exchange.

JPMorgan Chase, HSBC, Standard Chartered Bank, National Bank of Abu Dhabi and SBI Capital Markets were some of the investment bankers to the issue.