HDFC Bank, Bharti Airtel plan to raise $500 m each via overseas bond issues

HDFC Bank and Bharti Airtel are looking to raise $500 million each through issuing overseas US dollar denominated bonds, according to investment bankers. This will be the first ever foreign currency bond issued by HDFC Bank. Both the companies will meet investors in Hong Kong, Singapore and London starting Monday, sources said.

Both the companies are likely to raise over $500 million, depending on the demand, which the companies will decide after meeting the investors, sources said.

HDFC Bank and Bharti Airtel, which will raise the funds through its wholly owned unit in The Netherlands, will issue bonds with Reg-S status, which means the bonds can?t be sold to US-based investors and doesn?t have to be registered with the US Securities & Exchange Commission.

State Bank of India (SBI) is also looking to raise $500 million to $1 billion through this route by March end, along with Bank of India, which has started talks with investors to raise at least $500 million, according to sources.

Investment bankers said five Indian companies that used this route were able to raise funds at a cheaper price than previous years as demand for Indian bonds was very healthy, which have lured other companies to consider this route.

In January, Indian companies raised a total of about $2.43 billion by issuing bonds in the overseas markets. Exim Bank mopped up $750 million through 10-year dollar bond at 4.119% and attracted subscriptions worth $6.4 billion. Reliance Industries Limited raised $800 million through overseas perpetual bonds, or those without a set maturity, at a coupon of 5.875%, lowest ever interest rate for debt raise of its kind.

The Netherlands? unit of Tata Communications Ltd raised SGD250 million through a 3-year Singapore dollar-denominated bond. It was the first Indian company to sell its issue overseas without any rating from agencies such as Standard and Poor?s (S&P), Moody?s or Fitch. The order book of Tata Communications? issue stood at SGD3.5 billion.

ICICI Bank also raised SGD225 million through a 7-year Singapore dollar-denominated bond in January. The largest private bank of the country had given a price guidance of 4% while the final pricing saw tightening of 0.35% to 3.65%. Power Grid Corporation raised $500 million by selling dollar denominated 10-year bond issue at an interest of 3.875%.