HDFC Bank has raised $1.75 billion in twin tranches, expanding its offshore bond selling program as Indian banks push to raise foreign currency proceeds before the Reserve Bank of India closes the foreign currency non-resident bank deposit window early. The issuance is a major step for the country’s largest private sector bank to grow in foreign currency liquidity and maximize its overall borrowing profile.

Overseas dual-tranche bond issuance details

Private sector lender HDFC Bank stock fell in early trading, following its selling of $1.75 billion in 3-year, 5-year senior unsecured bonds from its GIFT City unit. The capital raise is the largest such overseas offering by the financial institution since the 2008 global financial crisis. HDFC Bank shares rose 0.41% to ₹728 in early trade.

On August 20, the bank, which is set up as an IFSC banking entity in GIFT City, formally announced the $1.75-billion bond issue in a ‘dual tranche’ format. The nation’s largest private-sector bank sold $500 million of three-year notes and $1.25 billion of five-year notes. The interest on the two classes of debt securities shall be made payable semi-annually, with payment due on August 26.

According to the maturity schedule, the three-year tranche shall expire on August 26, 2029, whereas the five-year tranche shall expire on August 26, 2031. As far as the pricing guidance is concerned, the three-year bonds sold at a spread of 88 basis points, preferred over comparable US Treasuries. The five-year notes spread 100 basis points of premium over U.S. Treasuries, indicating that international demand for the private lender’s paper was strong.

The large-scale campaign of overseas fundraising follows a series of moves by Indian commercial banks to access the debt markets abroad for cost optimisation. Financial entities make strident use of the concessional swap window offered by the Reserve Bank of India for External Commercial Borrowings that is available till the end of the calendar year.

Other notable institutions have also recently done offshore issuances in order to reduce interest costs and diversify the funding sources. IDFC First Bank raised $500 million through upgraded debt securities issues, and Kotak Mahindra Bank raised around $650 million from its maiden offering of five-year bonds in overseas debt securities.

Conclusion

The RBI’s regulatory frameworks were effectively applied, and the issuance of the landmark $1.75 billion offering reflects confidence among investors in India’s top private bank in global markets.

The bank has further strategically strengthened its international balance sheet by providing competitive pricing spreads over US Treasuries, while also reducing interest rate pressures at the home exchange. The strong market reaction, given the stalling overall stock market activity, shows immediate market acceptance of this funding method.