Bhatt: Cash appetite

Mumbai, July 23: The State Bank of India (SBI) has raised $1 billion (Rs 4,700 crore) in the US by issuing bonds to institutions.

India’s No. 1 lender said the rate of interest at 4.5 per cent was similar to what it paid in October when it raised $750 million.

In a statement, the bank said it could get similar rates though the financial markets had become more volatile following the sovereign debt crisis in Europe and fears of another recession.

Demand for bank loans is expected to increase with India poised to post a strong economic growth. Many banks have forecast that demand for credit is likely to be between 20 per cent and 22 per cent this year.

The SBI issue was made by its London branch and comprised $1 billion of senior unsecured bonds payable by 2015. The bonds were rated Baa2/stable by Moody’s and BBB-/stable by Standard & Poor’s.

According to the SBI, the issue was oversubscribed 4.8 times and witnessed demand from over 350 investors.

The total order book was more than $4.5 billion. The US investors received 55 per cent of the allocation, while Asian investors were allocated 28 per cent. The remaining 17 per cent were for European investors.

Asset and fund managers subscribed to 63 per cent of the issue, commercial and investment banks, 9 per cent, private banks, 15 per cent and insurance/pension funds, 4 per cent.

SBI chairman .P. Bhatt said, “This is a signature deal, despite market turbulence and volatility. In terms of the deal size, order book multiple, diversification into new investors in the US, and number and quality of investors, we achieved our objectives with this issuance.

“We believe the success of this transaction will also allow Indian issuers to more easily access the US markets,” he said.