HDFC Bank Raises $300 Million via Bond Issue to Fund Green Loans
The capital has been raised for a tenure of three years
HDFC Bank has raised $300 million through its first-ever sustainable bond issue, with the proceeds to be used to finance electric vehicles and green loans.
The bond, which has a three-year tenure with 95 basis points over the U.S. treasury, is part of an overall raise of $750 million through Regulation S bonds.
The bank said the remaining $450 million has been raised for a tenure of five years with over 108 basis points over the U.S. Treasury.
The bonds will be listed on the Indian International Stock Exchange (India NIX) in GIFT International Financial Services Centre (IFSC).
“’The funds raised through the sustainable finance bonds will be prioritized for lending towards electric vehicles, Small and Medium Enterprises, and affordable housing. We are strongly committed to building a green and social portfolio even as we continue adhering to the Bank’s risk philosophy,” said Arup Rakshit, group head of treasury at HDFC.
HDFC Bank claims these are the tightest credit spreads achieved by an Indian issuer for a three-year sustainable bond and five-year senior unsecured bond for a similar size of U.S. dollar Regulation S issuance.
In December 2022, HDFC received a loan of $400 million from the International Finance Corporation to improve climate-smart, affordable, and green housing in India. The funding was to help HDFC focus on its green affordable housing portfolio, with 75% ($300 million) of the proceeds earmarked for the sector. It also subscribed to India’s maiden issue of sovereign green bonds in the same year.
Last August, ICICI Bank offered loans amounting to $6.7 billion to sustainability and renewable energy sectors, including EVs and green-certified real estate, for fiscal year 2023.