Federal Bank plans to raise $500 million through a five-year dollar bond sale, according to bankers who requested anonymity because they lack authorization to speak with the media. The capital-raising effort follows a board approval on Friday for foreign-currency-denominated bonds issued through the International Financial Services Centre Banking Unit located in GIFT City.
Federal Bank Targets GIFT City for $500 Million Bond Sale
Federal Bank is keeping both private and public issue routes open for the upcoming offering due to time constraints, according to one of the bankers involved in the process. Reuters reached out to Federal Bank for comment, but the lender did not reply.
Since the Reserve Bank of India rolled out a concessional swap facility for overseas foreign-exchange borrowings on June 5, Indian lenders have collectively secured $9.3 billion through dollar bond offerings.
Did you know?
The Reserve Bank of India’s announcement on June 5 regarding a concessional swap facility triggered a massive wave of overseas foreign-exchange borrowings by domestic lenders.
Union Bank of India Parallel Dollar Bond Issuance
Participating bankers indicate that state-run Union Bank of India is also approaching the market to secure a minimum of $500 million through both three-year and five-year bond offerings.
Union Bank has provided initial price guidance of a spread of 120 basis points over U.S. Treasuries for the three-year notes and 130 basis points for the five-year notes.
Banks are scrambling to issue these dollar bonds following the Reserve Bank of India’s decision to implement an early closure of a discounted foreign-exchange swap facility for non-resident deposits. Lenders are actively seeking to use the dollars raised from these borrowings to support non-resident deposits, as reported by bankers.
Frequently Asked Questions
Why are Indian banks issuing dollar bonds?
Indian banks are raising capital through dollar bonds to support non-resident deposits following the Reserve Bank of India’s early closure of a discounted foreign-exchange swap facility.
How much is Federal Bank aiming to raise?
Federal Bank is aiming to raise $500 million through a five-year dollar bond sale issued via its International Financial Services Centre Banking Unit in GIFT City.
What are the pricing details for Union Bank of India’s notes?
Union Bank of India set an initial price guidance of a spread of 120 basis points over U.S. Treasuries for three-year notes and 130 basis points for five-year notes, aiming to raise at least $500 million for each tenor.
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