State Bank of India prepares to re-enter the US dollar bond market after nearly a year, aiming to raise up to $1 billion in a move driven by favourable regulatory changes and increased offshore funding demand among Indian lenders.
State Bank of India is preparing to return to the public dollar bond market after almost a year, with bankers expecting strong appetite for a planned five-year issue that could raise at least $500 million and possibly as much as $1 billion. The bonds are expected to be sold through SBI’s London branch, with initial price guidance set at about 120 basis points above US Treasuries, according to three merchant bankers cited by Reuters.
The timing reflects a broader shift among Indian borrowers. In June, the Reserve Bank of India introduced a dollar-rupee swap facility to make overseas borrowing cheaper for public sector entities and banks, a move that has helped spur renewed interest in foreign-currency funding. Moneycontrol reported that the facility carries a fixed rate of 1.5% a year, compounded semi-annually, and runs through the end of 2026 for eligible bank and corporate borrowing. Business Standard has also reported that the scheme could draw large inflows, with early uptake already visible across foreign-currency deposit and borrowing channels.
SBI had planned a $1 billion public dollar bond sale in June but shelved it after heavier issuance from other Indian lenders pushed up borrowing costs. It later turned to the private market, raising $600 million through three-year dollar bonds priced at a spread of 100 basis points over the secured overnight financing rate, or SOFR, Reuters reported. Large private banks including HDFC Bank, Axis Bank and ICICI Bank also tapped dollar funding in June and July, underscoring the renewed demand for offshore money among Indian lenders.
Fitch Ratings has assigned the proposed senior unsecured notes an expected BBB- rating. The agency said the bonds would be direct, unsecured and unsubordinated obligations of SBI, ranking equally with the lender’s other unsecured and unsubordinated debt. SBI had not immediately responded to Reuters’ request for comment.
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