Bank of Baroda is a state-owned lender that is ranked as the second-largest bank in India, but is preparing to raise about $500 million by issuing US dollar bonds. This capital-raising initiative will be under a wider offshore fund plan and will be implemented under the current $4 billion medium-term note (MTN) programme of the bank. When it initiates this process, the lender is seeking to use international capital markets to promote the foundation of its foreign currency funding as well as to finance its global operations.

Proposed bond issuance

The bond issuance proposed is a standalone Reg-S offering. The bank will concentrate on capital markets in Europe and Asia, specifically on the non-US investors as a part of the Reg-S framework. This arrangement enables the bank to issue securities without the need to make the offering registered in the United States. 

As a measure to control the process, Bank of Baroda has invited bids to appoint joint lead managers. These managers will be assigned the key duties of structuring the deal, selling the bonds to prospective investors, and managing the bookbuilding and pricing processes.

Although the ultimate specifications of the tenure, coupon rate, and pricing will be decided near the actual launch date, the bank has revealed that the issuance may be implemented in one or more tranches. This fluidity enables the bank to react effectively to the market conditions. The lead managers would be supposed to underwrite the proposed issuance completely, to offer some degree of financial assurance to the transaction.

Formal timeline and market context

Bank of Baroda has set a strict deadline by which it would select its joint lead managers. The bid submission date is January 16, and technical proposals shall be opened on February 17, and financial bids shall be opened on February 18. The bank is also updating its medium-term note programme to reflect the bank’s financial performance as of December 2025 before proceeding to the offshore sale.

The joint lead managers will be in contact with credit rating agencies and internal and external legal counsels once appointed. Their mandate also focuses on handling investor meetings and roadshows in order to create interest. They will supervise the issue of such bonds in established international exchanges, like the Singapore Exchange, or at GIFT City, so that the instruments are made available to the global investment community.

The sales of this $500 million bond are to be used for general corporate purposes. This involves the refinancing of the current liabilities and the supply of funds required by the bank to conduct its operations overseas. This action is consistent with an increasing pattern in which Indian lenders are diversifying their sources of funds to offshore markets in order to mitigate the potential impact of tight domestic liquidity situations, or in the case of a sharp increase in credit demand in the domestic market.

According to industry experts, when there is a narrow domestic liquidity, there is usually a window that the Indian banks can use to raise capital in the international markets and then lend to the Indian corporations through External Commercial Borrowings (ECBs). Even with this potential, the ECB market has been hit by certain headwinds in terms of the rupee against the dollar depreciation and the outflows of foreign portfolios. The offshore market is also a viable alternative to local funding sources for companies that are willing to fund their operations over a duration of three to five years.

Conclusion

The intention by Bank of Baroda to issue offshore bonds worth $500 million is an indication of its aggressive strategy of ensuring that its capital structure remains robust and that its funding strategy is diversified. The bank is also positioning itself to be able to effectively deal with its foreign currency requirement by accessing the international investors in Europe and Asia through its medium-term note programme, which is of a value of $4 billion.

This issuance will act as a milestone in the effort by the bank as it continues to seek to facilitate its global business presence and negotiate the intricacies of the global financial landscape as the bank goes through its selection process of lead managers and updates the financial records.