MUMBAI, Mar 3: HDFC Bank, the second largest private sector lender whose shares command the highest premium in the market across the world, has successfully sold a USD 500- million five-year bond at 3 per cent coupon, its lowest yet.
The USD 500-million unsecured senior bond issue, which saw 10-times demand or USD 5 billion, over the issue size, is part of HDFC Bank’s USD 1-billion overseas bond sale (medium term note). The money was raised through its Bahrain branch over the last weekend, StanChart, one of the merchant bankers to the issue told.
At 3 per cent coupon makes it the lowest for the bank ever and also the cheapest this fiscal, StanChart said.
“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, MD, capital markets at StanChart India, told PTI over the weekend.
“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 dollar, carry a coupon of 3 per cent per annum payable half yearly and mature in 2018, he said, adding, “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.”
Regulation S bonds or RegS bonds are those offered to non- US residents and qualified institutional buyers (under an exception to US securities laws enacted in 1990) and do not enjoy the same legal protection as other issues enjoy.
The bonds attract a coupon of 3 per cent and are priced at 99.687 to yield 3.068 per cent, which represents a 230 bps spread over the US treasuries, he added.
However, HDFC Bank refused to comment on this.
“The T+230 bps spread confirms investor recognition of HDFC Bank’s strongest credit metrics (vis-a-vis all other domestic banks), and establishes a new tight benchmark for domestic private sector bank issuers,” he said, adding that it was able to get such a tight deal thanks to the USD 5-billion worth of demand from more than 250 accounts. (PTI)
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