HDFC Bank sells $500 mn global bond issue at 3% coupon

HDFC Bank today managed to sell a $500-million five-year bond at 3 per cent coupon.

The unsecured senior bond issue saw a 10-fold demand - $5 billion - over the issue size. The bank had on Monday launched a road-show in Hong Kong, Singapore and London for this launch, which was officially announced last Wednesday.

The issue is part of a planned $1 billion overseas bond sale (medium term note) by India's second-largest private lender, whose shares command a high premium internationally.

The money was raised through its Bahrain branch over the last weekend, StanChart, one of the merchant bankers to the issue, said.

At 3 per cent coupon, "HDFC Bank achieved the lowest ever coupon / YTM (yield- to-maturity) achieved for any domestic issuer and the tightest bank issuance spread in recent months, for a five-and- half-year issuance," Jujhar Singh, managing director capital markets at StanChart India, said.

"The final spread was tighter than fair value for a new five-year US dollar-bond issuance for SBI implied by the secondary trading levels (222 bps over US treasury now), which is a feat for a debut USD bond issuance," Singh said.

The fixed rate senior unsecured notes or Regulation S bonds (RegS bonds) raised in US dollars carry a coupon of 3 per cent per annum payable half yearly and mature in 2018.

"The pricing got tightened by 25 bps from the initial guidance and 5 bps from the final guidance to 230 bps over the US treasury as investors lapped the opportunity to buy into the domestic banking sector," Singh said.