The State Bank of India, the largest lender in the country, has completed the placement of USD 250 million senior unsecured Green floating rate notes, known as “The Green Notes.” This issuance, part of SBI’s USD 10 Billion medium-term note program, reaches maturity on December 29, 2028, and was executed through a private placement facilitated by its London branch.

The Green Notes rated BBB- by S&P, were issued with a floating rate basis of 1.20% above SOFR and are now listed on the India International Exchange.

In line with its commitment to sustainable development, the proceeds from this issuance will be allocated to eligible green projects as per the Bank’s ESG Financing Framework, the bank said in a statement.

“The successful placement is a testament to SBI’s dedication to its sustainability goals, aiming to create a positive impact on the environment. Green banking and sustainability have long been areas of priority for SBI, as reflected in our ESG framework introduced earlier this year. The issuance of green bonds is a crucial step towards building a green portfolio,” Chairman of SBI, Dinesh Khara, said.

MUFG served as the sole green note coordinator and placement agent for this successful placement.

What is the SOFR Rate?

SOFR stands for Secured Overnight Financing Rate. It is a benchmark interest rate that serves as a replacement for LIBOR (London Interbank Offered Rate) in various financial transactions. SOFR reflects the cost of borrowing cash overnight collateralized by U.S. Treasury securities. It is considered a more reliable and transparent benchmark than LIBOR, which was phased out due to concerns about its accuracy and susceptibility to manipulation.

SOFR is based on actual transactions in the U.S. Treasury repurchase agreement (repo) market, providing a more objective measure of short-term borrowing costs. It is widely used in financial markets as a reference rate for various financial products, including floating-rate debt, mortgages, and other loans. The transition from LIBOR to alternative rates like SOFR is part of global efforts to enhance the integrity and stability of benchmark interest rates.