HDFC Bank has raised $1.75 billion through a dual-tranche dollar bond sale, marking the largest one-shot debt fundraising by an Indian bank. According to stock exchange notices, the transaction was executed through the lender's GIFT City branch.
The fundraising comprised $1.25 billion raised through the sale of five-year papers, equivalent to the largest single-tranche issuance, alongside $500 million raised through three-year papers. With this latest round, HDFC Bank has brought its aggregate fundraising to $2.50 billion, placing it at the top of the chart for banks raising money through dollar bond sales since the Reserve Bank of India (RBI) facility opened in June. ICICI Bank follows in second place with $2.05 billion.
Merchant bankers familiar with the transaction noted that the issue attracted approximately $7 billion in orders, significantly exceeding initial expectations and prompting the bank to accept a larger amount. Strong investor demand enabled tighter pricing than initially guided. The three-year papers were priced at 88 basis points over comparable U.S. Treasuries, while the five-year papers were priced at 100 basis points over. These figures were tighter than the initial guidance of 120 basis points and 130 basis points, respectively. However, the spread for the five-year issue was higher than the 90 basis points HDFC paid for a $750 million issue in June.
Market intelligence firm CreditSights, which holds an “outperform” rating on HDFC, had anticipated final pricing at spreads of 95 basis points and 105 basis points for the three-year and five-year papers, respectively. The firm estimated fair value at spreads of 82 basis points and 92 basis points.
Financial institutions have recently accelerated their dollar issuances following an RBI announcement last week stating that the concessional window provided for hedging non-resident deposits would end a month early on August 31. Most of the funds raised are being utilized to provide leverage to customers depositing funds under the discounted dollar deposit scheme. The central bank anticipates close to $80 billion in inflows through these specialized schemes.
"HDFC Bank's successful $1.75 billion dual-tranche dollar bond issuance highlights strong institutional confidence and robust investor demand within the Indian financial sector. Raising capital efficiently ahead of the RBI's August 31 deadline demonstrates proactive balance sheet management. As banks prepare for significant inflows under the discounted dollar deposit scheme, securing liquidity at competitive pricing through GIFT City reinforces the growing strategic importance of international financial services centres for large-scale debt fundraising in India." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
