State Bank of India likely to tap debt market by Aug via tier II issue, sources say

MUMBAI: State Bank of India is likely to kick off a debt fundraising cycle for state-run lenders in this fiscal year over the next couple of months, with a Basel III-compliant tier II bond issue, three sources familiar with the matter told Reuters on Friday.

India’s largest lender is looking to raise about 50 billion rupees ($584.59 million) through those bonds, with a 10-year or 15-year maturity in July or August, the sources said.

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 the media.

“The initial level talks have already started, but the duration would be finalised looking at the rates at the time of issuance and investors’ interest,” one of the sources said.

The source further added, SBI could also explore a 15-year structure with a call option at the end of 10 years, like its previous issue.

In September, the bank had raised 75 billion rupees through 15-year tier II bonds, which had a call option at the end of 10 years. In the previous financial year, SBI had raised 150 billion rupees through tier II bonds.

SBI has not tapped the bond market in the first half of 2025 and shelved a plan to issue infrastructure bonds in March due to elevated yields.

No other state-run lender has tapped the debt market in the first quarter of this financial year that started on April 1.

ICICI Bank is the only lender to tap the bond market. It raised 10 billion rupees through 15-year tier II bonds earlier this week, with a call option at the end of 10 years at a 7.45% coupon.