HDFC Bank and Bank of Baroda Raise $1.5 Billion in Overseas Loans Amid Stabilizing Rates

Economic Times
Economic Times
1d ago
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HDFC Bank and Bank of Baroda raised $1.5 billion in overseas loans at competitive rates, reflecting renewed investor trust in Indian banks after sovereign credit upgrades.
HDFC Bank and Bank of Baroda Raise $1.5 Billion in Overseas Loans Amid Stabilizing Rates
A What happened
HDFC Bank secured $1 billion through a three-and-a-half-year offshore loan at 94 basis points above the three-month SOFR, sourced solely from Japan’s MUFG, marking the bank's first such transaction in two years. Bank of Baroda raised $500 million through a five-year loan equally split between MUFG and HSBC, priced at 98 basis points above the three-month SOFR. These fundraising efforts occur after India’s sovereign credit rating upgrade to BBB by S&P and sustained strong loan growth, boosting the attractiveness of Indian banks to international investors.
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Key insights

  • 1

    Improved Sovereign Credit Rating Boosts Global Investor Appetite: The upgrade of India’s sovereign credit rating by S&P has directly enhanced the borrowing terms and willingness of global investors to finance Indian banks.

  • 2

    Stable Interest Rates Enable Cost-Effective Overseas Borrowing: Stabilizing benchmark rates like SOFR have allowed Indian banks to secure loans at tighter spreads compared to prior years, reducing funding costs.

  • 3

    Strategic Liquidity Management Supports Loan Growth: With strong domestic loan growth, Indian banks are proactively leveraging offshore markets to diversify funding sources and sustain credit expansion.

Takeaways

The successful $1.5 billion overseas loan raising by HDFC Bank and Bank of Baroda highlights growing investor confidence in Indian banks, grounded in sovereign rating upgrades and stable interest environments. This positions these banks well to support ongoing credit growth amid evolving global financial conditions.

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