HDFC Bank is preparing to issue at least $500 million in dollar bonds this week, utilizing India's central bank subsidized hedging scheme for overseas borrowings. This move follows similar discussions by State Bank of India and Bank of Baroda.
This issuance highlights Indian banks' strategy to access foreign currency funding at potentially lower costs through the subsidized hedging scheme, which could impact overall borrowing costs and foreign exchange flows in India.
India's largest private lender, HDFC Bank, is preparing to tap the international debt market by issuing dollar bonds worth at least $500 million this week. The bank plans to utilize a subsidized hedging window offered by the Reserve Bank of India for overseas borrowings. This move follows reports that other state-run lenders, State Bank of India and Bank of Baroda, are also exploring similar fundraising avenues through this scheme.
The proposed bond issue by HDFC Bank is expected to have a five-year maturity. Initial price guidance has been set at approximately 120 basis points above the yield on five-year U.S. Treasury notes. Sources familiar with the matter anticipate strong demand during the book-building process, suggesting the final yield could settle below 100 basis points over U.S. Treasuries. The bank may also decide to increase the issuance size beyond the initial $500 million target if investor appetite proves robust.
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