HDFC Bank, India's largest private lender, planned to raise at least $500 million through dollar bonds, including a five-year issue, under the Reserve Bank of India's new subsidised hedging window, Reuters reported, citing three sources.
DEAL DETAILS
Initial price guidance for the five-year bond was the five-year US Treasury yield plus 120 basis points, the sources said. The issuance was structured with a five-year tenor and was to be conducted under a recently introduced subsidised scheme, the report said.
One of the sources said the final cut-off should come below 100 basis points over US Treasury yields, as strong demand was expected in the book-building process. The source added that the bank could decide to raise more than $500 million depending on demand.
The plan came after the Reserve Bank of India said earlier in June that external commercial borrowings with an average maturity of at least three years by state-run companies and banks would qualify for a swap facility at a fixed rate of 1.5% a year, compounded semi-annually. The facility lowers hedging costs and helps cushion a fall in the rupee, and merchant bankers expect inflows of around $15 billion to $20 billion through this route over the next six months.
USE OF PROCEEDS
Proceeds will be used to meet the funding requirements of the bank's foreign branches and subsidiaries, to develop and expand business in its foreign offices and for general corporate purposes, the sources said, citing a term sheet.
Reuters had earlier reported that state-run lenders State Bank of India and Bank of Baroda were also in talks to raise dollars through the window. HDFC Bank did not reply to a Reuters request for comment.
Sources: Reuters, via The Hindu BusinessLine