HDFC Bank, the country’s largest lender by market value and the largest Nifty component by weight, has doubled its overseas borrowing through a cross-border loan syndication from a clutch of 23 global banks in a green-shoe option to the primary facility, initially borrowing 500 million USD from Japan’s largest lender MUFG in December.
HDFC Bank, which merged its mortgage lending parent into itself last year, chose to exercise the green shoe option to raise an additional $500 million, taking the total proceeds to $1 billion in what is the largest three-year overseas loan organized by an Indian bank.
“The syndication was completed on Thursday and the full green shoe option was exercised by HDFC Bank due to the strong demand from foreign banks,” said a person aware of the deal. “Banks from Asia, the Middle East and Europe have participated in this syndicate, which is the largest three-year syndication of an Indian bank for general corporate purposes.”
HDFC Bank raised $500 million from MUFG Bank in December. The money raised would be used by India’s top lender to shore up its liabilities after acquiring parent HDFC last year.
The loan was priced at 110 basis points above the three-month Secured Overnight Financing Rate (SOFR), which was trading around 5.35% in December 2023, meaning HDFC Bank paid around 6.45% for the three-year loan. One basis point is 0.01 percentage point.
MUFG was the only bank claimed with the loan which was financed through the Gift City subsidiary of the Japanese lender.
“At the syndication stage, MUFG chose to keep only $150 million with it while the rest was sold to other lenders from countries such as Taiwan, Japan and Saudi Arabia, among others. Other lenders also came in at the syndication stage, which resulted in the bank finally borrowing a total of $1 billion,” said the person quoted above.
“We do not discuss matters related to our clients and as such, will decline any comment on this matter,” MUFG said.
Among the banks that participated in the syndication were Taipei Fubon and Bank of Taiwan, both of that country, Saudi National Bank, Bank of China and CIMB Bank of Malaysia. ET could not ascertain the names of all the banks that participated in the syndicate.
HDFC Bank had to increase its liabilities and funding to match the maturity profile of its parent HDFC, which was merged with the bank effective July 1, 2023.
Slow deposit growth has affected most Indian private sector banks.