India's largest private lender raised $1.75 billion across two tranches on Thursday, pushing its aggregate issuance under the Reserve Bank of India's dollar window to $2.5 billion since the facility opened in June. The total places HDFC ahead of ICICI Bank's $2.05 billion and makes it the largest issuer to date under the program.
The issuance details
The GIFT City branch sold $1.25 billion of five-year notes, matching the largest single-tranche deal in the window's short history, alongside $500 million of three-year paper. A banker involved said the book attracted roughly $7 billion of orders, well above expectations, which prompted the bank to upsize the allocation.
Pricing and demand
The three-year bonds priced at 88 basis points over comparable US Treasuries, the five-year at 100 basis points. Both came inside initial guidance of 120 and 130 basis points respectively, a signal of solid demand. The five-year spread was still wider than the 90 basis points HDFC paid for a $750 million deal in June, reflecting the shift in market tone over the intervening weeks.
The RBI window context
Banks have been rushing to finish dollar fundraising before the RBI's hedging facility for non-resident deposits closes on August 31, a month earlier than originally scheduled. The central bank has indicated it anticipates inflows approaching $80 billion through the associated deposit schemes. Most of the proceeds are being deployed to provide leverage to customers who will place funds into those discounted dollar deposits.
What to watch
With the FCNR(B) scheme now ended, the five-year government bond yield settled at 6.52 percent. Treasury heads are evaluating purchases, though policy minutes due shortly may delay renewed buying. Sector liquidity remains ample, leaving funds positioned to move once the calendar clears.