HDFC Bank Raises $1bn via PerpNC5 at 3.7%

HDFC Bank raised $1bn via a debut dollar bond, a PerpNC5 AT1 at a yield of 3.7%, a solid 42.5bp inside the initial guidance of 4.125% area. The bonds have expected ratings of Ba3 and received orders over $4.4bn at final guidance, 4.4x issue size. Final orders are yet to be released. Coupons are fixed at 3.7% until the first reset date of February 25, 2027 and if not called, resets to the 5Y US Treasury + 292.5bp. The bonds will be written down temporarily if the Reserve Bank of India (RBI) deems the bank would fail without a write-down or an injection of public funds, or if the bank’s CET1 ratio drops to 5.5%. The CET1 trigger ratio applies until the end of September, after which it will rise to 6.125% from October 1, when the RBI will implement an additional capital conservation buffer. The AT1s carry a dividend stopper.

HDFC Bank is the largest private sector bank in India with a CET1 ratio of 17.2% as of June 30. Nomura’s Nicholas Yap says that the temporary write-down feature for Indian AT1s is more investor-friendly compared to AT1s in other Asian jurisdictions such as Thailand, which generally have permanent write-downs at CET1 or point of non-viability trigger events. IFR reports that HDFC Bank’s new AT1s priced tighter than offshore AT1 issues from some other Asian banks like Thailand’s Kasikornbank’s PerpNC5.5 issued earlier this month at 4%, and Bangkok Bank’s outstanding AT1s, callable in September 2025, that currently yield 3.8%.

Source: bondblox