State Bank of India, the country’s biggest lender, is marketing a five-year dollar-denominated bond, according to a person familiar with the matter.
The state-owned lender is offering the securities to yield about 400 basis points more than similar-maturity Treasuries, the person said, asking not to be identified because the details are private.
It would be the first dollar note of at least $100 million and maturing in more than 18 months sold by an Indian company since February, according to data compiled by Bloomberg. The figures don’t include convertible bonds.
“At this point, if an investor has to buy Indian assets, the risk premium will be high,” Taina Erajuuri, a money manager at FIM Asset Management, which oversees about $1.2 billion in Helsinki, said on July 23.
Axis Bank Ltd. (AXSB) sold $500 million of 5.125 percent five-year notes in February at 440 basis points more than Treasuries, according to data compiled by Bloomberg. Spreads on the securities were 412 basis points, according to prices from Credit Agricole SA. (ACA) The difference has narrowed from a high of 465 on May 31.
Both banks are rated BBB- by Standard & Poor’s and Baa3 by Moody’s, the lowest investment grade.
Hemant G. Contractor, State Bank’s managing director and head of international banking in Mumbai, wasn’t immediately able to comment when called by phone.
SBI’s $1 billion of notes due in July 2015, sold through its London unit, was trading at 322 basis points more than Treasuries, Credit Agricole prices show. The new bonds will also be issued via its London unit, the person said.
The bank has an equivalent of $5.97 billion of bonds and loans maturing by the end of 2017, according to data compiled by Bloomberg.
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