State Bank of India (SBI) has raised Rs 10,000 crore via infrastructure bonds to fund projects in sectors like power, roads and affordable housing.

This is the fifth infrastructure bond issuance launched by the country’s largest lender.

The 15-year infra bonds will attract a coupon rate of 7.36%. This represents a spread of 21 bps over the corresponding FBIL G-Sec par curve. The instrument is rated AAA with stable outlook, the state-run bank said.

With the current issuance, the total outstanding long-term bonds issued by the bank is at Rs 49,718 crore.

This issuance is very significant as the bank has been successful in raising long duration bonds successively, SBI said.

Earlier, the bank had placed a 15-year infrastructure bond at a coupon of 7.49% in September 2023.

SBI Chairman Dinesh Khara said that this issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.

The current issue was oversubscribed by about four times the base issue size of Rs 5,000 crore.  The total number of bids received was 143 indicating wider participation with heterogeneity of bids. 

The investors were across provident funds, pension funds, insurance companies, mutual funds and corporates, SBI said.

The board of bank has already approved plans for raising up to Rs 20,000 crore through long-term bonds in FY25.

The money raised through infrastructure bonds is exempt from regulatory reserve requirements like Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). The entire amount can thus be deployed in lending operations. 

As of March 2024, SBI’s infrastructure loans stood at Rs 3.94 trillion, up 5.72% year-on-year. While the power sector exposure was at Rs 2.04 trillion, ports and roads accounted for Rs 1.12 trillion and telecom Rs 30,376 crore. The share of infrastructure credit in the outstanding loan book was 12.23%.