SBI raises ₹10,000 crore via infra bonds; stock falls

State Bank of India (SBI), the country’s largest commercial lender, has raised ₹10,000 crore through 15-year infrastructure bonds priced at a coupon rate of 7.49%. This is the fourth infrastructure bond issuance by the public sector lender, which received an overwhelming response from investors with the bid oversubscribing by more than five times.

In an exchange filing on September 22, SBI said, “The country’s largest lender raised ₹10,000 crore today at a coupon rate of 7.49% through its fourth infrastructure bond issuance. The issue attracted an overwhelming response from investors with bids of ₹21,045.10 crores and was oversubscribed by more than 5 times against the base issue size of ₹4,000 crore.”

The bonds had a base issue size of ₹4,000 crore and a greenshoe option of ₹6,000 crore.

Despite this positive development, SBI shares declined as much as 0.7% to ₹594.05 in the first hour of trade so far. Early today, the shares of SBI opened marginally higher at ₹600.05, against the previous closing price of ₹598.10, and hit a high of ₹601.70 on the BSE. The banking heavyweight, however, lost momentum and slipped 1.3% from day’s high levels amid weakness in the broader market.

SBI shares touched a 52-week high of ₹629.65 on December 15, 2022, while it hit a 52-week low of ₹499.35 on February 1, 2023. With a current market capitalisation of 5.3 lakh crore, SBI shares have delivered 9.5% returns to its shareholders in the last one year, while it jumped nearly 17% in the past six months, thanks to improvement in credit matrix and robust financial performance. In the calendar year 2023, SBI share price fell nearly 3%, while it gained over 4% in the past one month.

The bank intends to use proceeds of bonds for enhancing long term resources for funding infrastructure and affordable housing segment.

As per the SBI, the total number of bids received was 134, indicating wider participation with heterogeneity of bids. The investors were across provident funds, pension funds, insurance companies, mutual funds, corporates etc.

“Based on the response, the bank has decided to accept ₹10,000 crores at a coupon rate of 7.49% payable annually. This represents a spread of 12 bps over the corresponding FBIL G-Sec par curve,” the bank informed exchanges.

Prior to this, SBI had raised long term bonds of ₹10,000 crores on August 1, 2023, at a spread of 13 basis points (bps) over corresponding FBIL G-Sec par curve. The Bank has AAA credit rating with 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 is at ₹39,718 crores.

“This issuance is also very significant as the bank 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,” SBI said in the filing.

In the April-June quarter of FY24, SBI reported a 178.25% jump in its net profit to ₹16,884 crore as compared to ₹6,068 crore during the same period last year. The net interest income (NII) rose 24.71% to ₹38,905 crore as compared to ₹31,196 crore in the same period last year.

On the asset quality front, SBI's gross NPA (net performing asset) ratio stood at 2.76% as of June 30, 2023, down by 115 bps YoY, while the net NPA ratio was recorded at 0.71%, down 29 bps on a year-on-year basis.

During the quarter under review, provisions stood at ₹2,501 crore as against ₹4,392 crore last year. Fresh slippages for the quarter stood at ₹7,659 crore, which was more than double from ₹3,185 crore in Q4 FY23, but lower by 21.37% from ₹9,740 crore last year.

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