State Bank of India, the country’s largest lender by assets, is shelving plans to raise funds this fiscal year, discouraged by elevated bond yields despite a policy rate cut and liquidity boost from the central bank, three sources aware of the matter said on Monday.
The bank had planned to raise as much as Rs 15,000 crore (about $1.7 billion) through sale of bonds before the end of March, but will now tap the market in the next financial year that starts in April, the sources said.
“The bank has been waiting for an opportune time to enter the market, but yields have stayed high for the last several weeks, and hence the bank is avoiding tapping the market in the near term,” one of the sources said.
The sources declined to be named as they are not authorised to speak to the media.
SBI did not immediately reply to a Reuters email seeking comment.
Yields on India’s 10-year corporate bonds rated ‘AAA’ have risen 15 basis points since early February despite India’s central bank cutting the policy repo rate by 25 basis points and infusing hefty liquidity into the banking system.
“SBI assessed its asset-liability position and despite having the board approvals, decided not to go through with the bond issues for now,” the second source said.
The bank will look at its funding requirement afresh in the next fiscal year, the person said.
SBI’s planned bond issues included Rs 5,000 crore through Basel III-compliant additional Tier-I perpetual bonds and Rs 10,000 crore through 15-year infrastructure bonds.
The bank had raised Rs 5,000 crore at 7.98 per cent in October via perpetual bonds.
Its state-run peers Bank of India, Punjab National Bank and Bank of Maharashtra raised an aggregate of Rs 7,252 crore through infrastructure bonds in February, just over half of what they had intended to raise.
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