HDFC Bank raises USD 1 bn in maiden AT1 bond issue

The largest private sector lender managed to get a final pricing of 3.7 per cent on the coupon as against an initial guidance of 4.125 per cent, while the final subscriptions stood at USD 3.2 billion, arrangers to the issue said. The issue is the first such by any bank after outstanding debt of Rs 8,400 crore raised by Yes Bank through the same instrument was written off in March 2020 as part of the lender's bailout backed by RBI, which had led to concerns about the instrument itself. “This is a mark of the faith they have in brand HDFC Bank and its prudent and robust business model. We believe that this successful issuance will set the road for other Indian players looking to raise AT1 bonds in the overseas markets,” it's treasurer Ashish Parthasarthy said. 

The AT1 notes will be listed on the India International Exchange (IFSC) Ltd. 

“Given the huge interest from marquee investors across the US, Asia and EMEA, the bond attracted the lowest ever coupon globally in this issue rating category, thus setting a benchmark for other Indian Banks to capitalize on,” Kaku Nakhate, President and India Country Head, Bank of America, one of the arrangers to the issue, said. As per reports, SBI is looking to raise over Rs 14,000 crore from the same instrument soon. Aiming to capitalize on the low rates environment and highly supportive market backdrop, HDFC Bank started the roadshows for the issue two days before launching the issue on Wednesday and engaged with as many as 125 investors, the arrangers said. 

Orders began flowing in as soon as it announced the initial pricing guidance and had touched up to USD 4.4 billion by the time it announced the final pricing of 3.7 per cent, they said. The arrangers, which also included HSBC, Standard Chartered, Citi and Barclays, had on Wednesday said Singaporean investor GIC and US-based Fidelity and Blackrock were among those who had subscribed to the issue. The bonds were sold to qualified institutional buyers in reliance on Rule 144A and outside the US in offshore transactions in reliance on Regulation S, the bank said. The lender's statement said this is the largest such issuance by an Indian bank. The HDFC Bank scrip closed 0.21 per cent down at Rs 1,511.50 on NSE on Thursday.