HDFC Bank has completed the issuance of $750 million in senior unsecured bonds through its GIFT City IFSC Banking Unit. The bonds, with a 5-year tenure and a coupon rate of 5.067% per annum, were issued on June 16, 2026, and are expected to be rated Baa3 by Moody’s and BBB by S&P. The proceeds from this issuance will be used for general banking activities and to meet funding requirements of foreign branches and subsidiaries.
This bond issuance leverages a new subsidized hedging window provided by the Reserve Bank of India (RBI). This scheme allows Indian banks to swap foreign currency borrowings into rupees at a fixed cost of 1.5% per annum for loans with a maturity of three years or more, significantly reducing hedging costs for overseas borrowings. Merchant bankers anticipate strong demand, suggesting the final pricing could be tighter than initial guidance, potentially below 100 basis points over U.S. Treasury yields.
Initial reports indicated HDFC Bank was looking to raise at least $500 million, with a projected initial guidance of 5-year U.S. Treasury yield plus 120 basis points. However, the bank successfully raised $750 million. The bonds are scheduled for allotment on June 24, 2026, and will mature on June 24, 2031. Interest payments will occur semi-annually on June 24 and December 24, starting December 24, 2026. The bonds are expected to be listed on the India International Exchange (IFSC) Limited and NSE IFSC.
This fundraising effort is part of a broader trend among Indian financial institutions utilizing the RBI's scheme to access international capital markets under favorable risk-management conditions. The scheme aims to lower volatility risks from currency fluctuations and improve access to international liquidity, with analysts predicting $15 billion to $20 billion in inflows through this route over the next six months for the banking sector.
