HDFC Bank's record dollar bond sale makes it top issuer under RBI window

HDFC Bank raised $1.75 billion through a dual-tranche dollar bond sale, the largest one-shot debt fundraising by an Indian bank, three merchant bankers said on Friday, as banks scramble to take advantage of a concessional window from the central bank.

India's largest private lender on Thursday raised $1.25 billion through the sale of five-year papers, equivalent to the largest single-tranche ‌issuance, and $500 ⁠million through three-year ⁠papers via its GIFT City branch, it said in a notice to stock exchanges.

Having raised an aggregate $2.50 billion, HDFC has now topped the chart of banks that have raised money through dollar bond sales since June, when the Reserve Bank of India facility was opened. ICICI Bank came in second with $2.05 billion. The issues attracted bids of about $7 billion of orders, which was far higher than what the ⁠bank expected, ‌encouraging it to accept a larger amount, said a banker.


The ​three-year papers ​were priced at 88 basis points over comparable U.S. Treasuries, ⁠while the five-year papers were 100 bps over. Both were ​tighter than the initial guidance of 120 bps and 130 ​bps, respectively, showing strong investor demand.

The spread was, however, higher than the 90 bps HDFC paid for a five-year issue for $750 million in June.

The bankers who spoke to Reuters for this story requested anonymity as they are not authorised to speak to the media.

Market intelligence firm CreditSights, which has an "outperform" ‌rating on HDFC, had expected the final pricing at a spread of 95 bps and 105 bps for the three-year and ​five-year papers. It, however, ​sees the fair ⁠value at a spread of 82 bps and 92 bps.

In the last few days, banks have been scrambling to complete their dollar issuances, with most funds being used ​to provide leverage to customers who will be depositing funds under the discounted dollar deposit scheme. The RBI last week said that the window provided to banks for hedging non-resident deposits would end a month early on August 31. The central bank expects close to $80 billion in inflows through these schemes.