Indian Banks Increase Dollar Borrowing as Overseas Funding Becomes Cheaper
Indian banks are increasingly raising funds through US dollar bonds after the RBI introduced a swap facility in June that reduced the cost of overseas borrowing.
- State Bank of India (SBI) raised $500 million through a 5-year dollar bond at a 5.25% annual coupon. The bond was issued at a spread of 88 basis points over US Treasuries, much lower than the initial guidance of 120 basis points. Investor demand was strong, with bids reaching nearly $2.5 billion.
- Other private banks, including HDFC Bank, Axis Bank, and ICICI Bank, also raised funds through dollar bonds during June and July.
- Bank of Baroda plans to issue dollar bonds through its IFSC Banking Unit at GIFT City. The funds will support the financing needs of its head office, overseas branches, and other general corporate purposes.
- The bonds are expected to carry investment-grade ratings of BBB (S&P), BBB- (Fitch), and BBB+ (CareEdge), matching Bank of Baroda’s existing credit ratings
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