HDFC Bank’s AT-1 bond issuance successful

Private sector lender HDFC Bank raised $1 billion through additional tier-1 (AT-1) bond issuance from global markets.

“We are pleased to inform you that HDFC Bank has completed pricing of the US dollar denominated Basel III additional Tier I notes,” it said in a stock exchange filing.

The proceeds will be used for banking activities.

“This is the largest US dollar AT-1 offering by any bank from India. This will shore up HDFC Bank’s already strong Tier I capital base. The offering was well received by global investors and was oversubscribed by over three times after the final price guidance was released,” HDFC Bank said in a media statement.

Also see: HDFC Bank goes abroad for risky bond sale after India clampdown

The US dollar denominated, direct, subordinated, unsecured, Basel III Compliant, additional Tier 1 notes were priced at 3.7 per cent , 42.5 basis points lower than the initial price guidance

Moody’s Investors Service had assigned a provisional rating of Ba3 (hyb) to the issue.

“This is one of the tightest pricing achieved by any bank from Asia with Ba3 rating,” HDFC Bank further said, adding that the AT-1 notes will be listed on The India International Exchange (IFSC).

“We believe that this successful issuance will set the road for other Indian players looking to raise AT-1 bonds in the overseas markets. We are confident that the recovery in the Indian economy will pick up pace, with falling caseloads and increased vaccination coverage,” said Ashish Parthasarthy, Treasurer at HDFC Bank.

This is the second such issue by an Indian lender. Previously, State Bank of India had also raised capital by AT-1 bonds in the overseas market.

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