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India’s largest private lender HDFC Bank will be raising US$1 billion through bond issue in the foreign markets, it informed the country’s exchanges.
The bank is planning to raise money through additional tier- 1 (AT1) bonds in the overseas market to fund its business growth. AT1 bonds are issued by banks to be part of a permanent equity capital base for them.
"We hereby inform you that the bank had approved the issuing of debt instruments in the form of the notes, subject to market conditions," HDFC Bank said.
The offering would be keenly watched as it offers foreign investors in the safest pie in an otherwise financially fragile Indian banking system. Indian banking shares have seen a massive rally in the past one year, as the country is trying to finance its recovery. The Nifty Private Bank Index has surged 57.5% in the last one year – seven percentage points more than 50.09% growth seen by ASX200 Banks during same period.
When we have a peer-to-peer comparison, India’s largest private lender has seen a 48.53% growth in shares in the last one year – four percentage points more than Australia’s largest private lender – Commonwealth Bank of Australia (ASX:CBA).
These dollar-denominated bonds would, however, not be able to be bought by Indian nationals in accordance with the applicable laws, including the Companies Act, 2013.
The bank claimed that an offering memorandum (OM) has been already prepared and will be made available to the potential investors in relation to the contemplated issue of notes.
The bank had, earlier in April, informed that it is planning to raise up to INR 500 billion (US$6.74 billion) during the next 12 months through issuing bonds.
The current issuance will suffice for almost one-seventh of the bank’s funding plans, with more probably in pipeline.
