India's Federal Bank latest lender to tap dollar debt market via GIFT City, bankers say

MUMBAI: India’s private sector lender Federal Bank has become the latest bank to tap the dollar debt market through its branch in GIFT City, as domestic lenders rush to raise overseas funds, two merchant bankers said on Monday.

Federal Bank is aiming to raise $500 million through a five-year dollar bond sale, the bankers said, requesting anonymity as they are not authorised to speak to the media.

The bank’s board approved the issuance of foreign-currency-denominated bonds through its International Financial Services Centre (IFSC) Banking Unit (IBU) in GIFT City on Friday.

Federal Bank did not reply to a Reuters query seeking comment.

“The bank is keeping both the private and public issue route open, because there is not enough time left,” one of the bankers said.

Indian lenders have raised an aggregate $9.3 billion through dollar bond sales since June 5, when the Reserve Bank of India announced a concessional swap facility for overseas foreign-exchange borrowings.

State-run lender Union Bank of India is also tapping the market to raise at least $500 million each through three-year and five-year bonds.

India’s largest private lender eyes $1 billion overseas debt raise, bankers say

Union Bank has provided initial price guidance of a spread of 120 basis points over U.S. Treasuries for the three-year notes and 130 basis points for the five-year notes, bankers added.

Banks have been scrambling to issue dollar bonds after the Reserve Bank of India announced an early closure of a discounted foreign-exchange swap facility for non-resident deposits.

Banks are seeking to use the dollars raised from these borrowings to support non-resident deposits.