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Mumbai: HDFC Bank, India's third-largest bank by market capitalisation, plans to raise up to $1 billion through a medium-term note (MTN) issue, and can afford to wait until global markets steady, the bank's treasurer said.
The bank plans to seek approval for the MTN programme, which would see it selling bonds with maturities of five years or more to international investors, Sudhir Joshi told Reuters on Friday.
Standard & Poor's rated the plan's lower-tier 2 bonds, which have a minimum maturity of five years, at 'BBB-', and upper-tier 2 bonds, which have a minimum maturity of 15 years, at 'BB+'. "We don't need the funds immediately and we are just getting the documentation ready before entering the markets at an opportune time," Joshi said.
Turmoil in global markets has squeezed credit availability and hit investor appetite for emerging market assets, despite robust growth in many of these economies.
Expansion
HDFC Bank would use some of the funds to set up a branch to Bahrain, the first overseas branch for the Mumbai-based lender, Joshi said. At end 2007, the bank had 754 branches in 327 Indian cities.
The bank has said its balance sheet grew 47 per cent in 2007 to Rs896.1 billion ($22.4 billion) and its capital adequacy ratio stood at 13.8 per cent, well above a required nine per cent.
Joshi said he expected the lead arrangers of the planned issue would be finalised by Monday.
Two investment bankers familiar with the matter said that Standard Chartered Bank, Barclays, Citigroup and Deutsche Bank were among the favourites.
In 2007, India accounted for about 18 per cent of Asia ex-Japan bond issues, selling 19 bonds worth $8.3 billion, up from $2.9 billion in 2006, according to Thomson Financial.
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