India’s HDFC Bank Ltd. is marketing a riskier dollar bond overseas that helps bolster its balance sheet, in a move that local peers may follow after the market regulator tightened its rules in the domestic market.
The country’s biggest lender by market capitalization may price Additional Tier 1 notes in the offshore market Wednesday. Those are unsecured securities with voluntary call options but no set maturity. It would be only the second such deal abroad from an Indian lender after the State Bank of India sold such securities in 2016.
“We expect further issuance from Indian banks given that the domestic market for AT1 issuance has shrunk following regulatory changes,” CreditSights analysts Yustina Quek and Pramod Shenoi said in a note.
While Indian banks have largely met their capital requirements, selling more AT1 notes will help them create cash buffers that will let them absorb any more loan losses in a country with world’s worst bad debt ratio. It could also free up funds to extend more loans and make acquisitions.
India’s HDFC Bank Ltd. is marketing a riskier dollar bond overseas that helps bolster its balance sheet, in a move that local peers may follow after the market regulator tightened its rules in the domestic market.
The country’s biggest lender by market capitalization may price Additional Tier 1 notes in the offshore market Wednesday. Those are unsecured securities with voluntary call options but no set maturity. It would be only the second such deal abroad from an Indian lender after the State Bank of India sold such securities in 2016.
“We expect further issuance from Indian banks given that the domestic market for AT1 issuance has shrunk following regulatory changes,” CreditSights analysts Yustina Quek and Pramod Shenoi said in a note.
While Indian banks have largely met their capital requirements, selling more AT1 notes will help them create cash buffers that will let them absorb any more loan losses in a country with world’s worst bad debt ratio. It could also free up funds to extend more loans and make acquisitions.
