By Dharamraj Dhutia and Khushi Malhotra
MUMBAI (Reuters) -India’s largest bank is set to return to the rupee debt market after a year with plans to raise funds through Basel III-compliant tier II bonds this month, three sources familiar with the matter said on Friday.
State Bank of India is in advanced stages of issuing the bonds with a 10-year duration to raise as much as 75 billion rupees (about $845.7 million), the sources said. The lender may invite bids before the end of the month, they added.
SBI did not immediately respond to a Reuters request for comment. The sources declined to be named as they are not authorised to speak to media.
The bonds will have a call option at the end of five years, and at the end of every year thereafter, the sources said.
“The issue would be priced as per a five-year instrument, and currently, there is sufficient gap between five-year and 10-year bond yields, which must have pushed them towards the shorter tenor,” one of the sources said.
Merchant bankers said that mutual funds could bid aggressively for the issue.
SBI had planned the tier II bond issue by August but delayed it due to the rise in yields. The bank also shelved an infrastructure bond issue in March due to elevated yields.
($1 = 88.6870 Indian rupees)
(Reporting by Dharamraj Dhutia, Khushi Malhotra; Editing by Mrigank Dhaniwala)