State Bank of India plans to borrow up to $1.25 billion, in what would be the largest dollar-denominated loan from the country’s financial sector this year, according to people familiar with the matter.
CTBC Bank, HSBC Holdings Plc, and Taipei Fubon Bank are arranging the five-year loan, which carries an interest margin of 92.5 basis points over the risk-free Secured Overnight Financing Rate, said the people, who asked not to be identified discussing private matters.
India’s top lender is raising the facility for general corporate purposes through its branch at the Gujarat International Finance Tec-City, the country’s newest financial hub, the people said, adding that the deal is being syndicated to other financiers.
SBI didn’t respond to requests seeking comment.
State Bank joins several other local borrowers in raising foreign currency debt this year. Non-banking finance companies, or so-called shadow banks, in particular have increasingly tapped dollar-denominated facilities amid stricter regulations at home.
Cholamandalam Investment & Finance Co. is the latest Indian non-banking finance company to seek a $300 million syndicated term facility. Elsewhere, local financier Union Bank of India’s Sydney branch is marketing a A$125 million ($81 million) three-year loan, while Bank of Baroda is raising a $750 million borrowing.
Despite the flurry of activity, India’s dollar loan volume has shrunk 27% to $14.2 billion this year due to the absence of large company borrowings, according to data compiled by Bloomberg.
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