HDFC Bank, India’s largest private sector lender by market capitalisation, has raised $300 million through its first ever sustainable finance bond issue. The bond is part of a larger $750 million raise through Regulation S Bonds, which are offered to investors outside the US.
HDFC Bank’s Sustainable Finance Bond Details
The sustainable finance bond has a tenure of three years and a coupon of 5.196%, which is 95 basis points over the US Treasury yield. The proceeds of the bond will be used to fund green and social loans, such as electric vehicles, SMEs and affordable housing, in accordance with the bank’s sustainable finance framework.
“The funds raised through the sustainable finance bonds will be prioritised for lending towards electric vehicles, SMEs and affordable housing. We are strongly committed towards building a green and social portfolio even as we continue adhering to the bank’s risk philosophy,” said Arup Rakshit, group head-treasury at HDFC Bank.
HDFC Bank’s Senior Unsecured Bond Details
The bank has also raised another $450 million through a senior unsecured bond with a tenure of five years and a coupon of 5.180%, which is 108 basis points over the US Treasury yield. The proceeds of this bond will be used for funding and expansion of the bank’s foreign branches and subsidiaries, as well as for general corporate purposes.
“The proceeds from the five-year notes will be used for funding and expansion of our foreign branches and foreign subsidiaries as well as for general corporate purposes. This will help us diversify our funding sources and strengthen our balance sheet,” said Srinivasan Vaidyanathan, chief financial officer at HDFC Bank.
Listing and Ratings
The bonds will be listed on the India International Exchange (India INX) in GIFT IFSC, a special economic zone in Gujarat. The bonds have been rated Baa3 by Moody’s and BBB- by S&P, reflecting the bank’s strong credit profile and financial performance.
“We are pleased to receive these ratings from Moody’s and S&P, which reaffirm our robust financial position and prudent risk management practices. These ratings also enhance our credibility and reputation in the global markets,” said Kaizad Bharucha, executive director at HDFC Bank.
Investor Response and Implications
The bond issue was well received by investors across Asia, Europe and the Middle East, with an order book of over $1.6 billion. The bank had mandated Barclays, Bank of America, JP Morgan, MUFG and Standard Chartered as joint global coordinators and lead managers for the issue.
“We are delighted with the overwhelming response from the investors for our bond issue. This reflects the confidence and trust that they have in our bank and its growth prospects. We thank them for their support and look forward to strengthening our relationship with them,” said Shyamala Gopinath, chairperson at HDFC Bank.
HDFC Bank’s sustainable finance bond issue is a landmark transaction for the Indian banking sector, as it demonstrates the bank’s commitment to environmental and social causes, as well as its ability to access diversified sources of funding in the global markets.
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