State Bank of India (SBI) may carry out a planned ₹10,000 crore sale of infrastructure bonds in the market this week, with the securities likely to be of 15-year maturity, market daily Business Standard reported.
The report noted that the country’s largest bank had last week said that its board had approved the issuance of infrastructure bonds in the current fiscal year. It, however, had not mentioned the maturity of the bonds or when the sale would take place.
“They are trying for a 15-year bond and it will be more or less finalised soon whether it will be 15 years or not. They will possibly be doing it this week if they get the approval,” a source told BS.
"SBI’s last bond is quoting at around 7.53-7.57 percent. The infra bond could be around 7.60 percent levels. If they get an okay for a 15-year tenure, they could map it on the EBP (electronic debt bidding platform) by this week itself,” the source added.
The report further informed that a 14-year government bond was last auctioned in the primary market at a 7.43 percent yield.
Infrastructure bonds are securities that are exempt from the computation of net demand and time liabilities (NDTL) — a proxy for deposits. Hence, they are not subject to cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements. Infrastructure projects aside, the money can also be used for loans to affordable housing ventures.
SBI’s infrastructure loans book grew by 10.81 percent year-on-year (YoY) to ₹3.67 trillion as of September 2022. Of this, exposure to the power sector was ₹1.95 trillion and that to roads was ₹95,614 crore, informed the report.
Last month, private sector lender ICICI Bank raised ₹5,000 crore through infrastructure bonds for funding projects in segments like power and roads, etc, added the report.
Over the past few months, banks have embarked on a slew of debt issuances in order to raise capital as deposit growth has continued to lag credit growth significantly, noted BS. This has exerted pressure on banks to mobilise funds in order to fund the loan growth, it pointed out.
