HDFC bank raises Rs 7,425 crore through Infrastructure bond issue: Report

Updated : Dec 19, 2023 12:20
|
Editorji News Desk

India's largest private lender HDFC Bank has raised Rs 7,425 crore through its maiden 10-year infrastructure bond issue on Monday, at the coupon rate of 7.71%, reported NDTV Profit. The coupon rate is the annual income an investor can expect to receive while holding a particular bond. As per the report, this was the first debt sale by the banking heavyweight after its merger with Housing Development Finance Corp. in July.

HDFC Bank Fund Raise

HDFC Bank had received 75 bids worth Rs 8,700 crore. It was intending to raise Rs 10,000 crore through the issuance of infrastructure bonds, with a base issue size of Rs 5,000 crore and a greenshoe option of the same amount.

Also Read: RBI strengthens regulations on personal loans for banks and NBFCs

Greenshoe Option is a provision in IPO granting the underwriter the right to sell more shares than originally planned. 

Macro-economic challenges

Experts who spoke to NDTV Profit said that while the prevailing macroeconomic conditions are pretty much congenial for entities to raise funds through the domestic bond market, banks are unable to raise the entire amount.

"Few banks have tried to raise capital through the bond markets and couldn’t succeed in accepting the entire issue amount due to pricing issues, besides comparatively lesser investor participation," Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP told NDTV Profit.

Srinivasan also said that banks have been scrambling to raise funds after the Reserve Bank of India increased the risk weightage on consumer credit. 

As per NDTV Profit, along with HDFC Bank, several banks including State Bank of India, Canara Bank, ICICI Bank Ltd. and Bank of Baroda have issued infrastructure bonds in the last couple of months. Nabard, too, is looking to raise Rs 10,000 crore through infrastructure bonds, with a greenshoe option of Rs 5,000 crore.

A reason for firms to use infrastructure bond for long-term capital is a cushion from a regulatory perspective. Funds raised through infrastructure bonds are deployed for infrastructure lending, where the RBI exempts banks on maintaining statutory liquidity ratio and cash reserve ratio.

 

HDFC bank

Recommended For You

Stock Market Roundup: December 23, 2024 - U.S. Markets Lead, Europe Shows Stability, Asia Gains
editorji | Business

Stock Market Roundup: December 23, 2024 - U.S. Markets Lead, Europe Shows Stability, Asia Gains

editorji | Business

Nifty 50 Stock Analysis – December 23, 2024: Key Losses and Technical Insights

editorji | Business

Top Nifty 50 Gainers on December 23, 2024: Technical Analysis of JSWSTEEL, ITC, HINDALCO, TRENT, and HDFC

editorji | Business

Indian Stock Market stage sharp recovery after five days of fall

editorji | Business

India has potential to be key sustainable aviation fuel producer: IATA