Mumbai: Abu Dhabi Investment Authority (ADIA), Amundi Asset Management, Eastspring Investment Singapore, along with some Taiwanese banks and broking houses, were likely among the lead investors that subscribed to State Bank of India’s Formosa bonds, said people familiar with the matter.
India’s largest bank reportedly obtained bids worth about $1 billion of which it retained $300 million worth of subscriptions. This was the first-ever Formosa bond sale by an Indian bank. ET reported on Monday that the bank was planning to sell Formosa bonds for up to $500 million.
State Bank of India and individual investors could not be contacted immediately for comments. The bank, however, issued a release on the fundraising but did not mention bidders and the total bids.
The bank, however, said Taiwanese investors have received 15 per cent of the allocations.
The bond sale proceeds will be used to expand loans overseas and for other business purposes. Those securities are of five-year maturity and are priced in proportion to US Treasury benchmarks.
The bank saved on funding costs as the papers yielded 30 basis points lower than the initial price guidance that was 130 basis points over the five-year US Sovereign gauge. It tightened to 100 basis points.
Citibank, HSBC, Standard Chartered were among others that helped the lender raise offshore money.
The bonds will be listed in Taipei and Singapore stock exchanges and the India International Exchange (India INX) at GIFT City in Gujarat. SBI sold the bonds from its London branch.
Global rating companies including Fitch, Moody’s and S&P graded SBI papers with investment-grade ranks BBB-, Baa3 and BBB-, respectively.
“We expect SBI to be reasonably better placed among peers,” Fitch Ratings said in a note on January 10. “Still, financial transparency is viewed as pivotal for general business and depositor confidence and can lead to significant reputational risk if not managed well.”
Meanwhile, local companies are rushing to tap the global credit market before the US Federal Reserves resumes its much-awaited rate hike cycle.
Indian Railways Finance Corporation and JSW Infrastructure hit the market Thursday aiming to raise about $500-750 million each. While the government-back company was selling 10-year papers, the JSW arm was issuing seven-year securities.
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