HDFC Bank to raise up to Rs 5,000 cr via infra bonds

MUMBAI: The country’s most valued lender HDFC Bank is raising up to Rs 5,000 crore by selling infrastructure bonds in the local market, a move that reflects a revival in loan demand.

Those bonds are likely to offer 6.45-6.55 percent with seven-year maturity, three people familiar with the matter told ET.

The bank is in talks with large insurers and pension funds as the bond sale will be up for bidding on Thursday.

HDFC Bank did not immediately comment on the matter.

“Some of those insurers or new pension funds will likely act as anchor investors,” said one of the persons cited above.

The base size of the issue is Rs 2,000 crore with an option to retain subscriptions up to Rs 3,000 crore.

The bond sale is coming up ahead of the September quarter end, when the Reserve Bank of India will announce the borrowing calendar for the second half of the fiscal year.

“The pricing expectation is reasonable as similar papers are currently yielding in the same range,” said a local bond arranger.

ICICI Bank infrastructure bonds are yielding 6.53 percent in the secondary market. HDFC Bank may offer more than 6.50 percent if it manages to garner the whole or three-fourths of the targeted sum, dealers said.

Rating company Crisil rated HDFC Bank infra bonds triple-A (stable).

“The ability of the bank to manage collections and asset quality going forward this fiscal, given the current macro-economic environment, will be a key monitorable,” the rating company said in a note last month.

Earlier, the bank set a precedent by raising $1 billion Additional Tier 1 bonds offshore, the largest such issuance by any Indian bank. HDFC Bank has total assets of Rs 17,53,941 crore by end of June quarter this fiscal year.

Local bond sales are showing signs of picking up as rates have turned attractive amid better rate transmissions.

Contrary to expectations of higher fiscal borrowing to offset the rising economic costs of the pandemic, funding costs are going down for these companies that may be on the cusp of expansions.

Spreads or differentials between companies rated up to AA- and respective government bonds have narrowed up to 24 basis points in the 5- and 10-year segments, ET reported on September 21.

The central bank’s successful weekly auctions primarily helped rationalise yields.

So far this fiscal year, companies sold Rs 7.54 lakh crore bonds versus Rs 6.84 lakh crore during the same period last year and Rs 6.72 lakh crore in 2019.



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