SBI to raise $3-4 billion in offshore debt this fiscal
State Bank of India (SBI) plans to raise up to $4 billion in offshore debt this fiscal to help expand its overseas base. Of this, $1-1.5 billion will be raised by July, Reuters reported on Thursday.
State Bank of India (SBI) plans to raise up to $4 billion in offshore debt this fiscal to help expand its overseas base.
Of this, $1-1.5 billion will be raised by July, Reuters reported on Thursday.
A spokesperson for the bank was not available for a comment. Analysts believe public-sector banks prefer overseas fundraising as international investors are convinced about the credit quality of Indian banks.
Moreover, “there is always the urge to raise Tier II capital as cheaper interest rates hold the key,” said the head of a Mumbai-based financial services firm.
However, many doubt the amount being raised would be enough to match the growth of India’s largest lender.
“The amounts these banks raise is very small compared to their size. $3-4 billion might sound big in terms of the Indian markets, but internationally it’s not that big an amount,” said Ajay Manglunia, senior vice-president, Edelweiss Securities.
Significantly, experts believe more PSU banks could be looking at raising funds abroad as monetary tightening makes borrowing costs expensive for many. Earlier this month, the Reserve Bank of India raised key rates by 50 basis points, the ninth such increase since March last year.
“Public sector banks have very few options in terms of raising funds and they find it easier to go for overseas raising,” said Abizer Diwanji, head - financial services at consulting firm KPMG. Manglunia, too, sees more banks announcing overseas fundraising plans.
A clutch of banks has already announced such plans. Last October, IDBI Bank announced plans to raise up to $1 billion through medium term notes (MTN) this fiscal. Then, in April, Indian Bank too said it will raise $1 billion via MTN to fund its overseas branches. And earlier this month, Allahabad Bank announced plans to raise $500 million to fund its Hong Kong operations. The BSE Bankex has seen a decline of 7.11% to 12429.07 since the start of the year, compared with a 10.6% in the broader BSE benchmark to 18335.79 during the same period.