HDFC Bank's Green Commitment: Raises $300 Million with Debut Sustainable Finance Bond

Explore HDFC Bank's groundbreaking move as it raises $300 million through its maiden sustainable finance bond, prioritizing funds for electric vehicles, SMEs, and affordable housing.

Gobind Arora
Published on: 8 Feb 2024 6:04 AM GMT
HDFC Banks Green Commitment: Raises $300 Million with Debut Sustainable Finance Bond

HDFC Bank's Green Commitment: Raises $300 Million with Debut Sustainable Finance Bond

India's largest private lender, HDFC Bank, has marked a significant milestone by successfully raising $300 million through its inaugural sustainable finance dollar-denominated bond issue. The three-year sustainability bond, priced at a yield of 5.196%, demonstrates the bank's commitment to environmentally conscious financial practices.

The pricing of the sustainability bond is particularly noteworthy, with a spread of 95 basis points over the three-year U.S. Treasury yield—significantly lower than the initial guidance of a 125-bps spread. Arup Rakshit, Group Head-Treasury at HDFC Bank, emphasized that the funds raised through these sustainable finance bonds would be prioritized for lending activities directed towards electric vehicles, small and medium enterprises (SMEs), and affordable housing.

In addition to the sustainable finance bond, HDFC Bank has also secured an additional $450 million through senior unsecured five-year dollar bonds, with a coupon of 5.180%. These notes, priced at 108 bps over the five-year U.S. yield, also surpassed the initial guidance of a 140-bps spread.

The utilization of the proceeds from the five-year notes is earmarked for funding and expanding the bank's foreign branches and foreign subsidiaries, as well as supporting general corporate purposes. The Regulation-S dollar notes, to be rated Baa3 by Moody's and BBB– by S&P Ratings, will be issued by the bank's Gujarat International Finance Tech City branch and listed on the India International Exchange.

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Barclays, Bank of America, JP Morgan, MUFG, and Standard Chartered stand as the joint global coordinators and lead managers in this landmark financing initiative. The collaboration of these global financial powerhouses underscores the significance of HDFC Bank's commitment to sustainable finance on a global scale.

This move not only aligns with global trends in responsible financing but also positions HDFC Bank as a leader in incorporating sustainable practices into the core of its financial operations. The successful issuance of these bonds not only demonstrates investor confidence but also emphasizes the bank's dedication to contributing to a greener and more sustainable future.

HDFC Bank's debut in sustainable finance with the issuance of a $300 million bond marks a pivotal moment in the financial sector, showcasing a commitment to environmentally friendly practices and responsible financial stewardship. The bank's strategic allocation of funds towards electric vehicles, SMEs, and affordable housing reflects a holistic approach towards sustainable economic development.

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Gobind Arora

Gobind Arora

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