SBI completes 750-m euro bond issue

The issue comes as the bank awaits government nod to come out with a Rs 20,000-crore rights issue to further capitalise itself. The permission for the rights issue is expected anytime from now and the issue may hit the market late December or early January.

A statement from the State Bank said the proceeds from the benchmark-size bond issue-its largest ever single tranche bond issue and issued through its London branch - which is part of its policy of diversifying its debt capital market profile, will be used for funding the lender's euro-denominated assets and for general corporate purposes.

A benchmark-size bond typically is of USD 500 million or more. It can be noted that last euro bond issues was from ICICI Bank when it had issued a 500-million euro bond in March 2007. "This transaction is the first Asian euro bond issue in 2010 and the first such Indian issue in the past three years. The deal is the largest single-tranche bond ever completed by SBI, as well as the largest euro-denominated issue from India and also amongst the largest euro denominated issue by an Asia, ex-Japan, financial institution," SBI said in an release.

"The strong demand generated after a single day's book-building followed a three-day roadshow and enabled SBI to raise the 750 million euro under challenging market conditions," the SBI release said further.

The issue, which has a fixed annual coupon of 4.5 per cent, was lead-managed by Barclays Capital, BNP Paribas, Credit Agricole, CIB, DB, StanChart and UBS.

The order book was well diversified both in terms of geography and investor type. The deal generated 1.3 billion euro worth orders from 180 investors, with nearly a quarter of the demand (24 per cent) coming in from Germany, followed by Britain (21 per cent), France (15 per cent), 11 per cent each from the Netherlands, Switzerland and rest of Europe and 7 per cent from Asia.

On the investor profile, the bank said a large majority of them (56 per cent) were asset managers, followed by banks (36 per cent), insurers constituting 2 per cent and the rest 7 per cent being others. These senior unsecured, Reg S bonds have a Baa2 ratings from Moody's and BBB - by S&P. The bonds will be settled on November 30 and will mature on November 30, 2015.

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