State Bank of India, the country’s largest lender, drew strong demand in its return to the public dollar bond market after nearly a year, with pricing tightening sharply from initial guidance, three merchant bankers said on Wednesday.
SBI raised $500 million through a five-year dollar bond issued via its London branch, the lender said in a stock exchange filing late on Tuesday.
The final spread was broadly in line with CreditSights’ expectation of 90 basis points, although the research firm expects it to tighten further to around 80 basis points in the secondary market.
Spreads on dollar bonds issued by Indian borrowers have widened in recent weeks on expectations of heavy supply following the Reserve Bank of India’s swap concession window, while demand has been tempered by attractive rates on foreign-currency deposits.
“As we had anticipated, some of this spread premium has begun to fade as supply is absorbed... We have an outperform recommendation on SBI,” CreditSights analysts said in a note.
