HDFC Bank approves issuance of debt instruments in the form of AT1 bonds from foreign markets

HDFC Bank approves issuance of debt instruments in the form of AT1 bonds from foreign markets

HDFC Bank said Monday it will issue debt instruments in the form of additional tier 1 bonds in international markets. “…we had informed the exchanges that HDFC Bank’s board of directors, in its meeting on July 17, 2021, is considering raising long-term funds through the issuance of Basel III-compliant additional tier 1 bonds (Notes), on the international markets, subject to market conditions,” it said in a scholarship application.

An offering memorandum has been prepared which will be made available to potential investors in respect of the proposed issuance of Notes, it further said. However, the bank did not specify the amount to be collected.

Ba3 (hyb) rating

Meanwhile, Moody’s Investors Service said in a statement that it has assigned a Ba3 (hyb) rating to HDFC Bank’s proposed USD-denominated, undated, non-cumulative and subordinated AT1 capital securities. “The Ba3 (hyb) rating is three steps below the baa3 Baseline Credit Assessment (BCA) and HDFC Bank’s adjusted BCA, reflecting the likelihood of impairment associated with non-cumulative coupon suspension, as well as the likelihood of a high loss seriousness when the bank reaches the point of non-viability,” it said. In its meeting on July 17, the bank’s board of directors had approved the issuance of stand-alone foreign currency-denominated perpetual debt instruments as a Basel III compliant AT1 bond to foreign (global) investors outside India, in an unsecured, public or private placement basis, together with a proposed listing of the AT1 bonds and other related activities during fiscal year 2021-22, subject to market conditions and applicable approvals.

Also read: Is HDFC Ergo Optima Secure value for money?

Previously, the State Bank of India had also raised capital through AT1 bonds in the overseas market. The capital raised through the AT1 bonds will help strengthen the bank’s capital base. HDFC Bank’s total capital adequacy ratio was 19.1 percent as of June 30, 2021, against a regulatory requirement of 11.075%.

.

Leave a Comment

x