SBI raises $300m via 3-year SOFR+100bp notes

The deal in brief

State Bank of India (SBI) has raised $100 million through a three-year senior unsecured floating-rate note issue arranged through its London branch. The issuance places SBI among the first large state-owned lenders to access overseas debt markets after the Reserve Bank of India (RBI) announced steps to make external commercial borrowings (ECBs) and related overseas fundraising more attractive. The transaction was disclosed in an exchange filing made on Monday.

The timing matters because RBI’s measures are designed to lower effective overseas funding costs by addressing hedging expenses, a key constraint for Indian issuers borrowing in foreign currency. SBI’s deal also arrives against a broader plan approved by its board to raise funds overseas during FY27, signalling that the bank is actively diversifying its liability mix.

What SBI issued and when

SBI said it concluded the issuance of $100 million in senior unsecured floating-rate notes with a three-year maturity. The notes carry a coupon of the secured overnight financing rate (SOFR) plus 100 basis points, with interest payable quarterly in arrears. The bonds have been issued under Regulation S.

The notes will be issued through SBI’s London branch on July 6, 2026. SBI’s use of its offshore branch is consistent with how large Indian lenders typically access global investors while meeting documentation and listing norms used in international bond markets.

Pricing, structure, and the investor lens

The coupon structure is floating, linked to SOFR with a spread of 100 basis points. A floating-rate structure can be attractive for some investors in a rate environment where short-term benchmarks matter, while it also shapes the issuer’s interest-cost profile compared with fixed-rate issuance.

SBI described the notes as senior and unsecured, implying they rank ahead of subordinated liabilities but are not backed by specific collateral. The notes being under Regulation S indicates they are offered outside the US to non-US investors under that framework.

RBI’s overseas-borrowing incentives: what changed

RBI announced a package of measures on June 5 aimed at encouraging overseas fundraising by banks and state-owned companies. Under the revised framework cited in the report, the central bank will bear the cost of hedging for eligible foreign-currency borrowings. That change is intended to lower the all-in cost of overseas borrowing, which typically includes not only the bond coupon but also the cost of hedging currency risk.

The stated objectives of the measures are to support foreign currency inflows, ease funding costs, and deepen India’s external financing avenues. The deal flow that followed has included multiple issuers coming to the market soon after the measures were operationalised.

FCNR(B) deposits and why they feature in this story

The RBI measures also include steps to encourage mobilisation of fresh 3 to 5-year FCNR(B) deposits. RBI said it will bear the full hedging cost to banks for eligible deposits until September 30. It also exempted such deposits from statutory pre-emptions, according to the report.

Bankers cited in the report said banks have raised interest rates on FCNR(B) deposits to around 6-7%, from earlier levels of about 3%, reflecting the improved economics when hedging costs are covered. In SBI’s case, the article linked the note issuance to demand from non-resident Indians looking for leverage while placing fresh FCNR(B) deposits at higher interest rates.

How the $100 million fits SBI’s FY27 fundraising plan

SBI’s board approved, on May 12, a plan to raise up to $1 billion through overseas bond issuances in FY27. The bank framed the strategy as part of an effort to diversify its funding base and broaden access to global investors. The report added that the fundraising could be done in one or multiple tranches and could include fixed or floating rate bonds denominated in US dollars or other major foreign currencies, through public offers or private placements under Reg-S/144A.

Separately, SBI’s board has also approved raising up to ₹60,000 crore in FY27 through debt instruments, including long-term bonds and Basel III-compliant Additional Tier 1 and Tier 2 bonds, in Indian rupees or other convertible currencies. The bank said these would be issued through public offer or private placement to domestic and overseas investors during FY27.

What peers have done under the RBI window

SBI is not alone in testing the post-measures market. The report noted that HDFC Bank, Axis Bank, and Power Finance Corporation (PFC) have raised dollar bonds since RBI operationalised the concessional swap window. This backdrop is important because it shows that issuance has not been confined to one segment, but has extended across banks and a government-owned non-bank lender.

Another report excerpt included expectations that multiple large institutions could collectively raise at least $1 billion from overseas markets, seeking to benefit from the RBI’s swap incentive for ECBs. Within that context, SBI’s $100 million is positioned as an early transaction, though the report noted the issuance size was lower than what the market may have expected.

Key facts and rates: summary tables

Issuance and policy timeline

SBI FCNR(B) interest rates cited in the report

Market impact: why investors are watching these deals

The immediate market relevance is that RBI’s framework changes alter the economics of foreign-currency fundraising for Indian banks. If hedging costs are borne by the central bank for eligible borrowings, offshore funding can become more competitive versus domestic alternatives, especially for tenors aligned with the window’s conditions.

For SBI, the $100 million note provides incremental foreign-currency funding and adds to a broader funding and capital plan that includes domestic and overseas debt issuance. The report also pointed to expectations of more activity in overseas markets from large lenders and public-sector-linked issuers.

Analysis: what this says about funding strategies in FY27

SBI’s choice of a floating-rate structure at SOFR plus 100 basis points suggests an approach focused on accessing global liquidity while using a familiar benchmark for international investors. The use of the London branch and a Regulation S format aligns with common issuance channels for Indian financial institutions.

The RBI measures create a policy-driven incentive for banks to raise overseas funds and mobilise FCNR(B) deposits by addressing hedging and regulatory cost frictions. The adjustment in FCNR(B) deposit rates cited in the report shows how quickly banks have repriced liabilities when the cost structure shifts.

What to watch next

Bankers cited in the report said the $100 million note sale may be the first of such issuances by SBI. The same report suggested SBI could consider additional issuances ahead of the September 30, 2026 deadline linked to the high-interest-rate deposit scheme.

Investors will also track how much of SBI’s board-approved $1 billion overseas bond programme is executed, in what tenors, and under what pricing levels. Separately, the bank’s plan to raise up to ₹60,000 crore through various debt instruments in FY27 provides a wider view of how it intends to fund growth and support capital.

Conclusion

SBI’s $100 million, three-year SOFR-linked note sale from London is an early example of how Indian lenders are responding to RBI’s June 5 incentives for overseas fundraising. The transaction sits within SBI’s broader FY27 funding agenda, including an approved overseas bond plan of up to $1 billion and a larger domestic and foreign-currency debt-raising programme. The next key dates for the market are July 6, 2026, when the notes are issued, and September 30, 2026, which the report linked to the RBI-supported window for eligible FCNR(B) mobilisation.