HDFC Bank to obtain cash from overseas markets using AT-1 bonds

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To finance its commercial expansion, HDFC Bank intends to obtain capital in the international market by issuing additional tier- I (AT1) bonds. These dollar-denominated bonds are intended to raise up to USD 1 billion for the bank. To strengthen its balance sheet as credit growth picks up once the pandemic’s second wave fades, according to two people familiar with the situation.

HDFC Bank said on Monday that it intends to raise capital in the foreign market by issuing additional tier-I (AT1) bonds to finance its commercial expansion. The bank intends to raise capital through further tiers. These dollar-denominated bonds are intended to raise up to USD 1 billion for the bank. “We hereby inform you that the bank had approved the issuing of debt instruments in the form of the notes, subject to market conditions,” HDFC Bank stated in a regulatory filing.

It has stated that an offering memorandum (OM) has been produced and will be made available to interested investors in connection with the proposed issuance of notes. The notes would not be offered or sold in India under relevant regulations, including the Companies Act, 2013, as modified from time to time, according to the statement.

Earlier in April, the bank announced plans to raise Rs 50,000 crore through bond issuance over the following 12 months. HDFC has announced that the bank intends to raise funds through the private placement mode by issuing perpetual debt instruments (part of additional tier-I capital), tier-II capital bonds, and long-term bonds (financing of infrastructure and affordable housing) up to a total amount of Rs 50,000 crore over the next 12 months. HDFC Bank said. Because perpetual bonds have no maturity date, they might be considered as equity rather than debt.

The funds will be raised over the next 12 months “via perpetual debt instruments (part of extra tier I capital), tier II capital bonds, and long term bonds (financing of infrastructure and affordable housing),” according to the bank’s BSE filing following according to the regulation filing.

The notes would not be offered or sold in India under relevant regulations, including the Companies Act, 2013, as modified from time to time, according to the statement.

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