HDFC Bank — the country’s largest private-sector lender — on Thursday raised $1.75 billion through twin dollar bonds with three-year and five-year maturities, marking one of the largest dollar bond raises by an Indian bank since the global financial crisis (GFC).
On Friday, ICICI Bank’s board raised its overseas borrowing mandate to $5 billion from $2.5 billion earlier.
New Delhi-based PNB is also planning to raise up to $1 billion in September, including a $500 million greenshoe option, the bank’s MD & CEO Ashok Chandra told Business Standard in an interaction. The bank is on track to meet its $2.5 billion foreign currency non-resident (bank), or FCNR(B), deposit mobilisation target, even though the swap facility for such deposits will be available only until August 31, instead of September 30 as announced earlier by the RBI. PNB has already mobilised $1.43 billion, Chandra said.
In the past two weeks alone, Indian banks have cumulatively raised nearly $5 billion through dollar bonds, with marquee lenders such as State Bank of India (SBI), Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and IDFC First Bank raising funds through this route.
HDFC Bank’s latest $1.75 billion fundraise through the twin dollar bond issuance takes the bank’s total fundraising through dollar bonds over the past two months to $2.5 billion.
In its latest fundraise, the bank raised $500 million through three-year bonds at 88 basis points over US Treasuries, and $1.25 billion through five-year bonds at 100 basis points over Treasuries. The bank indicated that it may raise more if there is a need.
“Never say never,” said Arup Rakshit, group head-treasury, HDFC Bank, when asked whether this would be the bank’s last dollar bond issue.
“We will see. If there is a business opportunity for us to grow and there is customer demand, why not? We will take these decisions depending on the customer business growth that we can reasonably expect,” Rakshit told Business Standard, adding that the $1.75 billion fundraise would be used for overseas loans, including lending to NRIs against FCNR(B) deposits, as well as for the normal balance-sheet requirements of the bank’s overseas branches.
State-run Union Bank of India is also looking to issue its first dollar bond in more than a decade.
Many other private-sector banks are also expected to test the market in the coming weeks and months as the central bank’s concessional swap window for overseas foreign currency bonds (OFCBs) and external commercial borrowings (ECBs) remains open until December-end, even as the window for FCNR(B) deposits closes at the end of August.
Bankers at foreign banks that are arranging such deals expect an additional $5-6 billion of bond and loan issuances through the rest of the year. Indian banks and public-sector undertakings are expected to raise close to $20 billion through overseas foreign currency borrowings, comprising about $10 billion of loans and $8-10 billion of bonds.
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