SBI Fund Raising:-
SBI said it has raised Rs 9,718 crore through its second infrastructure bond issuance at a coupon rate of 7.70 per cent per annum for the 15-year money. This is the second fund-raising since early December when it had mopped up Rs 10,000 crore via infra bonds.
More About The Fund Raising:-
The fund proceeds will be utilised for enhancing long-term resources for funding infrastructure and affordable housing. The issue attracted good response from investors with bids of Rs 14,805 crore, indicating an oversubscription of 2.96 times from 118 bidders,investors were from across mutual funds, provident and pension funds, and insurers.
The pricing of 7.70 per cent represents a spread of 17 bps over the G-Sec curve. Before this, the bank had raised Rs 10,000 crore through infrastructure bonds in December,2022, at a spread of 17 bps over the corresponding G-Sec curve. This issuance is significant considering this is the first time a domestic bank is issuing a 15-year infrastructure bond, helping it in long-term lending to the infrastructure segment.
What Is a Bond?
A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
Bond details include the end date when the principal of the loan is due to be paid to the bond owner and usually include the terms for variable or fixed interest payments made by the borrower.
Government Securities, popularly known as G-Sec Bonds, are debt instruments issued by the Central government to meet its fiscal needs. Like any other bond, you essentially lend money to the issuer when you buy it from them. The issuer could be a corporation or the central government. In return, the organisation uses the money to meet their fiscal needs. In the case of the Central government, they can use the money for funding government projects such as boosting infrastructure.
Important takeaways for all competitive exams:
- SBI Chairperson: Dinesh Kumar Khara
- SBI Founded: 1 July 1955
- SBI Headquarters: Mumbai