HDFC Bank, Kotak Mahindra Bank, Yes Bank are among five lenders that are eyeing 3 billion dollars via dollar bonds or loans overseas as per a Bloomberg
report. People familiar with the matter told Bloomberg that HDFC Bank plans to raise as much as 1 billion dollars via the dollar bond sale. Four other lenders-Federal Bank, Kotak Mahindra Bank, RBL Bank, and Yes Bank are separately considering raising between 250 million dollars and 500 million dollars each via bonds or loans as per the report. Experts believe the fresh plans and Indian private banks' push to raise billions overseas is a direct response to Reserve Bank of India’s efforts to boost capital inflows to support the rupee. If completed, this will be HDFC Bank’s second dollar bond issue since raising 750 million dollars from a five-year debt sale in June. Bankers believe the overseas fundraising is attractive because the RBI’s swap facility can lower hedging costs and make dollar funding more competitive. HDFC Bank's $750-million deal showed strong investor demand, while bankers expect other lenders to follow, despite currency and refinancing risks. Some analysts see the planned overseas fundraising as an opportunity for Indian banks as the RBI’s concessional dollar-rupee swap facility reduces the effective cost of hedging foreign-currency borrowings, while others believe RBI's measures to attract dollar inflows are aimed at strengthening foreign-exchange liquidity and easing pressure on the rupee at a time of elevated oil prices and global uncertainty. For banks, the attraction is not simply access to overseas capital but potentially lower all-in funding costs. HDFC Bank’s earlier 750 million dollar issue was the first lender transaction to use the special RBI swap facility. However, analysts remain cautious on foreign-currency borrowing as that also carries currency and refinancing risks if hedging costs rise after the RBI facility expires.
