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Feb 6 2007 12:00AM
SBI plans to raise $700mn overseas
The country's largest lender State Bank of India would raise $700 millionby March through bonds overseas, chairman and managing director O P Bhattsaid today.He said the bank may go for aa follow-on public offer in 2007-08.The bank will raise $700 million by March through long- and medium-termbonds, Bhatt told reporters on the sidelines of finance minister PChidambaram's meeting with public sector bank chiefs. The borrowing is partof the $2 billion medium term note programme of SBI.On equity sale, he said it could be a combination of both public offer andrights issue.We have plans to come out with a public offer in the next fiscal, however,we still have to finalise the details, Bhatt said.On interest rates, he said the bank will be able to maintain net interestmargin of 3 per cent for 2006-07. The bank's asset liability committee willreview interest rates other than housing loan rates, he said.Bloomberg adds: State Bank of India (SBI), the country's biggest bank,hired Barclays Plc and Citigroup Inc to sell dollar-denominated bonds, lessthan a week after Standard & Poor's (S&P;) raised its ratings to investmentgrade.Deutsche Bank AG and HSBC Holdings Plc will also manage the sale, SBI'sfirst of hybrid bonds, which are securities that combine thecharacteristics of debt and equity.The four banks will also arrange a sale of five-year notes, according to adocument sent to the investors. The amounts have not been determined.SBI, which has 100 million customers, may cut its debt costs after S&Praised; the Mumbai-based bank's rating one rung on 30 January to BBB-. Thebank is raising funds to meet new Central bank rules on capital levels andmeet demand for loans. The Reserve Bank of India (RBI) on 21 July permittedbanks to increase capital by selling debt overseas.After the ratings upgrade, the issuer now definitely has more bargainingpower when it comes to pricing the bonds, said Ken Hu, who helps to manage$100 billion at First State Investments in Hong Kong. Demand for this dealshould be good because the ratings upgrade broadens internationalinvestors' base for Indian bonds.Arun Shandilya, State Bank of India's chief financial officer in Mumbai,was not immediately available to comment. SBI last month increased $300million of bonds it sold in December to $500 million. The five-yearfloating-rate notes pay half a percentage point more than the three-monthLondon interbank offered rate, a benchmark for corporate borrowing,according to Bloomberg data. Three-month Libor, was set at 5.36 per centon 2 February.|
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