MUMBAI: HDFC Bank, India’s largest private lender, is tapping the dollar bond market for the second time in two months. According to banking sources, the Mumbai-based institution plans to raise at least $500 million each through three-year and five-year bonds issued via its GIFT City branch.
The fundraising effort comes as banks scramble to close overseas capital raises before a special central bank foreign exchange swap window shuts down. Bankers familiar with the matter stated that investor calls have been scheduled, and the final pricing for the issue is expected to be completed by Friday. Given that this represents the last issue before the end of August, sources indicated that the final quantum could easily surpass $1 billion. HDFC Bank did not respond to a media query seeking comment on the matter.
The timing of the debt raise is tied to a recent policy decision by the Reserve Bank of India (RBI). Last week, the central bank decided to prematurely close a discounted swap facility that had been provided to banks for hedging non-resident deposits. Central bank Governor Sanjay Malhotra told financial media that the RBI expects close to $80 billion in inflows via these subsidised swap facilities, which were initially opened in June.
The upcoming transaction follows a series of similar moves by other Indian financial institutions. HDFC Bank's peer, ICICI Bank, has targeted US-based investors for dollar bonds issued over the past few weeks. If completed, this latest bond sale will bring HDFC Bank’s total proceeds from such issues to $1.75 billion, placing it just behind ICICI Bank in total overseas debt raised during this period.
Meanwhile, other private lenders are also active in the market. IDFC First Bank recently announced that it has raised $600 million through its debut dollar debt sale with a three-year maturity via a private placement.
Data shows that Indian lenders have collectively raised $7.55 billion via dollar bonds since the concessional hedging facility was announced on June 5. The broader rush to secure funds is driven by the upcoming closure of the swap window on August 31, which was moved forward by a month from its initial deadline of the end of September.
"The decision by HDFC Bank to tap the dollar bond market ahead of the RBI's swap window deadline highlights a tactical approach to liquidity management. As regulatory timelines shift, financial institutions are swiftly optimizing their overseas fundraising strategies to capitalize on available hedging facilities. This move reflects broader macroeconomic adjustments in the Indian banking sector as lenders actively secure capital before structural policy windows close." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
