SBI Capital Markets extended its dominance of the Indian loan market in 2013, offering innovative syndicated financings to clients even as the domestic economy grew at its lowest rate in more than a decade.
SBI Caps handled the year’s biggest domestic financings and structured some of the most complex loans. Notably, it reduced its reliance on State Bank of India, handling some jumbo loans with no participation from the parent.
SBI Caps’ market share grew to around 66% during IFR’s review period from around 43% for the previous year, no mean feat in an environment where liquidity was at a premium. Overall volumes were down 15% at US$34bn.
The company played to its strengths, sole-managing a jumbo 12-year Rs228bn (US$4.18bn) project financing for Tata Steel in the largest syndicated loan in India during IFR’s review period. The widely distributed loan, the result of two years of work, closed in May with 21 lenders.
Far from relying on parent SBI, India’s biggest bank, SBI Caps was able to sell down 75% of the non-recourse loan, having designed a covenant package that was attractive to lenders, including a clause that linked the margin to Tata Steel’s credit rating.
Even as this loan was syndicated, SBI Caps was in talks with lenders to restructure Rs77bn of onshore and US$250bn of offshore debt for Jindal Stainless, another major steel producer. Jindal’s operations are located next to the site under development for Tata Steel’s own complex.
The Jindal restructuring involved more than two dozen domestic lenders and about nine foreign banks, and provided much-needed liquidity for the borrower at a time when it was reeling from a slowdown in the steel sector.
SBI Caps also arranged a complex financing package for state-owned oil-and-gas company Bharat PetroResources. The funds went to the development of four offshore oil-and-gas fields in Mozambique, Brazil and Indonesia.
SBI brought together 12 Indian lenders to provide a US$1.75bn 15-year standby letter of credit, allowing BPRL to raise US dollar funding of US$950m at an attractive cost, saving more than 150bp over the cost of a vanilla US dollar loan.
The deal also underlined SBI Caps’ distribution skills, as parent SBI was not involved in the funding.
Other key deals included a Rs149.77bn project financing for ONGC PetroAdditions, a US$300m acquisition financing for Gulf Oil Corp, as well as a Rs54.18bn loan for Jindal Power – the largest power financing this year – and a Rs10.96bn dual-tranche financing for a police housing project that Punj Lloyd Infrastructure is developing.
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