MUMBAI : HDFC Bank plans to sell dollar bonds to support its plans to expand lending outside India, joining other banks in tapping opportunities in overseas markets, according to two people aware of the matter. The country’s largest private bank is expected to raise $500 million by selling five-year bonds, the people said, requesting anonymity. HDFC Bank has hired Citigroup, HSBC, JP Morgan, Mitsubishi UFJ Financial Group, Societe Generale and Standard Chartered for the proposed Reg S transaction, which bars the securities from being sold to people in the US. TRENDING STORIES See All Premium Amazon fund leads $104 mn investment in FreshToHome Premium AIDCF cautions advertisers against advertising on Star, . . . Premium Horoscope Today: Money astrological predictions for 21s . . . Premium In 2023, your remote work comes at a cost HDFC Bank is set to sell the senior notes, rated Baa3/BBB, through its GIFT City branch. This will be the second such dollar bond issuance by the bank since 2021 when it became the first Indian lender to list its $1 billion foreign currency additional tier-I bonds, priced at 3. 7%. Over the last year, banks have expanded their overseas lending book as Indian corporates shifted their preference to the loan market from the bond market due to the rising US interest rates. SBI, for instance, saw a 21% growth in its overseas book as of December 2022. Bank of Baroda saw a 39% growth in its international book during the same period. “This trend is quite evident from the overseas loan book growth of SBI, BoB, and BoI. Primarily, this business is coming from India-linked corporates, many of which seem to prefer the Indian bank over their overseas competitors. We expect this trend to continue as the overseas business volume of Indian or India-linked corporates is growing at a very healthy pace," said Asutosh Mishra, head of research at Ashika Stock Broking. In an interview with CNBC-TV18, Uday Kotak, managing director and chief executive of Kotak Mahindra Bank, said that Indian corporates must borrow from Indian financial institutions as they are currently borrowing more from foreign lenders. HDFC Bank’s dollar bond follows the ₹ 25,000 crore bond issuance by parent Housing Development Finance Corp. (HDFC) last week. HDFC, which is in the process of merging itself with the bank, offered to pay a coupon of 7. 97% for the 10-year bonds. That compares with the benchmark bond, which is trading at around 7. 36%. MINT PREMIUM See All Premium Amazon fund leads $104 mn investment in FreshToHome Premium In 2023, your remote work comes at a cost Premium Is a liberal arts degree worth the money? Premium India’s earnings growth prospects more promising than peers Both HDFC and HDFC Bank have been raising long-term domestic funds considering the new asset liability profile. The housing financier has raised more than ₹ 50,000 crore through bond sales ahead of the amalgamation. HDFC Bank has been trying to scale distribution and low-cost deposits to fund its current credit growth and meet future requirements. According to analysts, the bank must raise ₹ 2 trillion- ₹ 3 trillion via deposits and bonds by the second quarter of FY24. However, the bank has been unable to keep up with its deposit target of ₹ 1 trillion per quarter owing to stiff competition from other banks. In a call with investors in the third quarter, the bank clarified that it had planned to raise ₹ 80,000 crore to ₹ 1 trillion per quarter. However, the bank could clock in only ₹ 59,796 crore of incremental deposit growth in the third quarter. While the merger is on track and is expected to be completed by the second quarter of FY24, the bank is yet to receive any communication from RBI on the relaxations sought regarding the merger. The lender has sought forbearance from RBI in respect of complying with the timelines for statutory liquidity ratio (SLR) and cash reserve ratio (CRR) requirements. The merger has so far received approvals from various regulatory and statutory authorities, including the Pension Fund Regulatory Authority of India (PFRDA), the Insurance and Regulatory Development Authority of India (Irdai), the Securities and Exchange Board of India (Sebi), the Competition Commission of India (CCI), the Reserve Bank of India and stock exchanges. “It’s a good thing we are having an issuance from India. There will be significant demand for HDFC Bank bonds. It’s good that we have a strong entity coming after the Adani episode," said Hemant Mishr, CIO and co-founder of S CUBE Capital. HDFC Bank reported a 19% growth in profit to ₹ 12,259 crore for the quarter ended December. The capital adequacy ratio stood at 17. 66%. Total deposits grew by 19. 9% to ₹ 17. 33 trillion as of 31 December, while advances grew by 19. 5% to ₹ 15. 06 trillion. Their overseas loan book constitutes 2. 8% of the overall loan book. ABOUT THE AUTHOR Gopika Gopakumar Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D. C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016. Read more from this author Catch all the Industry News , Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates . More Less OPEN IN APP.