SBI Eyes ¥30 Bn Samurai Loan To Tap Asia’S Yen Debt Boom

State Bank of India, the country’s largest lender, is seeking a ¥30 billion ($197 million) facility, according to people familiar with the matter, adding to a record volume of yen loans raised by borrowers in Asia excluding Japan this year.

Mitsubishi UFJ Financial Group Inc is the lead bank of the deal, which will be raised in the Gujarat International Finance Tec-City, India’s newest financial hub, said the people, who asked not to be identified discussing a private matter. The facility carries a five-year tenor, the people added.

It will pay an interest margin of 60 basis points over the Tokyo overnight average rate, or TONA, a global benchmark gage for yen-denominated deals, according to one of the people. SBI and MUFG didn’t immediately reply to requests seeking comments.

Talking to Bizz Buzz, MV Hariharan, former treasury head, SBI, said, “Climate funding is currently enjoying favourable tenors and rates. SBI might've done the required due diligence before going in.”

But with the biggest polluters now getting more ballast for their resistance and reluctance to climate change in the form of the POTUS, who's a well-known sceptic, I have my doubts on the future of climate funding. ESG too is facing huge headwinds and vacillations on its viability and effectiveness as well as whether it's actually quite a sham. Given these factors, the jury is still out on how things will pan out in this space, he said.

The loan would add to a tide of Samurai loans, where foreign companies raise yen debt, in Asia recently as they seek to lower funding costs and diversify away from the relatively-expensive dollar space. Borrowers from Asia excluding Japan have signed a record ¥1 trillion in such facilities year-to-date, according to Bloomberg-compiled data.

When contacted, a senior official of SBI said requesting anonymity, “We have a good number of customers in large corporates like IRFC and PFC who want borrowing to be done in Yen. As the Japanese currency was depreciating at present, we have received huge demand for borrowings in Yen and hence our plan.”

The latest loan would be SBI’s first facility denominated in the Japanese currency since September 2023, when it had signed a ¥40 billion five-year loan, according to Bloomberg-compiled data. The Indian bank is also seeking a syndicated dollar-denominated deal of as much as $1.25 billion.

SBI plans to use proceeds of the yen loan for foreign currency lending, one of the persons said.