“The success of this transaction reflects the improvement in the bank’s credit and business profile, which is the result of tremendous work put in by SBI as a team over the years,” SBI Chairman Dinesh Khara said exclusively to ET.
“In addition, we have also benefited from favourable macroeconomic conditions, including a largely stable currency and domestic yields, despite the volatility in overseas markets,” he said. The deal represents the “largest sole-underwritten transaction for an Indian borrower since 2018,” a source aware of the development told ET.
SBI, with the biggest branch network and a share of about a fifth in all outstanding bank credit in the country, is often seen as a proxy by analysts for loan demand and deposit options in a country that is increasingly financialising its savings.
Deposit Access, Asset Quality
“With one of the most granular deposit bases amongst all the banks globally and net NPAs that are at historic lows, we are not surprised at the outsized response to SBI’s syndicated loan,” said Hitendra Dave, chief executive officer, HSBC India.
Sixteen banks across Taiwan, South Korea, the Philippines, the Middle East, and Europe participated in the transaction, with robust demand leading to it being upscaled from an original single-tranche format worth $500 million to $750 million and finally $1 billion in a double-tranche format.
The 3-year tranche of SBI’s loan which was worth $500 million, was priced at 80 basis points above the Secured Overnight Financing Rate (SOFR), a global benchmark now used to determine the pricing of US dollar-denominated transactions.
Meanwhile, the 5-year tranche of the loan, which was increased by $250 million to $500 million using a greenshoe option, was priced at 100 bps over the SOFR.
Banking Outlook Upbeat
Participating banks attributed the strong investor appetite for SBI’s loan to the upbeat view on the Indian banking sector, which has seen an improvement in capital ratios and a decline in gross non-performing assets (NPA) to decadal lows.
