Private sector lender, HDFC Bank, on Wednesday, August 18, fixed the coupon rate of its USD 1 billion Additional Tier- 1 (AT-1) bonds at 3.70 percent per annum. It saw a lot of appetite from overseas investors for the issue, Ashish Parthasarthy, treasurer, told CNBC-TV18.

“We have not gone to the dollar market since 2013 - that was the last public issue of our dollar bonds, and there is a lot of appetites, we could see, from overseas investors for this fund. So, it's been good; at one go if you can raise USD 1 billion, it’s extremely good. I don't think in one issue it's possible to raise the equivalent of $1 billion from the domestic market,” Parthasarthy said.

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On coupon cost, he said, “3.7 percent is the coupon. There would be some additional costs like lawyer and banker fees, etc., but that's not much; it’s all in dollar cost. Just to note that it is one of the tightest priced AT-1 bonds with a rating from the region, which we get because of where we are rated on the sovereign. It's an extremely well-priced one. Yes, it's been raised for India from India. So it will be hedged somewhere in the domestic market; the exchange rate has to be hedged.”

“If the dollar was raised from an overseas branch, where the balance sheet is in dollars, then one wouldn’t have to hedge it, but since we have raised it from India and it will be on the rupee book, so we will need to hedge it,” said Parthasarthy.

For the entire interview, watch the video

(Edited by : Dipika Ghosh)