Axis Bank Secures $800 Million In Dual-Tranche Dollar Bond Offering

Axis Bank has raised $800 million through a dual-tranche dollar bond issue, joining a growing list of Indian lenders tapping overseas markets after the Reserve Bank of India (RBI) introduced a concessional swap facility for foreign currency borrowings.

The fundraising includes a $500 million Additional Tier 1 (AT1) perpetual bond and a $300 million senior five-year bond. The transactions were completed on Tuesday.

At 12:27 PM on Wednesday, Axis Bank shares were up 1.09%. The fundraising comes at a time when Indian banks are exploring cheaper foreign funding options under the RBI's swap window.

Strong Investor Demand For The Issue

The bond sale attracted orders worth more than $2.2 billion, according to a person familiar with the transaction. Of the total demand, around $900 million came for the senior bond, while the remaining orders were placed for the AT1 issue.

Investors were largely from Asia as the Regulation S offering was not open to US investors. However, global asset managers including BlackRock and Ninety One Asset Management, participated in the issue.

Both bonds were priced better than the bank's initial guidance. The five-year senior bond was priced at 110 basis points above the five-year US Treasury yield, tighter than the initial guidance of 130 basis points. The AT1 bond was priced at 6.87%, compared with the initial indication of 7.12%.

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Why Is The Bond Issue Significant?

With the five-year US Treasury yield trading at around 4.27%, Axis Bank's senior bond is expected to offer a yield of about 5.37%.

According to another person aware of the development, the AT1 issue may replace perpetual bonds raised by the bank five years ago that become callable in September. Both bond issuances are eligible for the RBI's 1.5% fixed-rate swap facility available for external commercial borrowings.

Axis Bank did not respond to requests for comment. HSBC and MUFG declined to comment, while Barclays, BNP Paribas and Citibank did not respond.

Source:

The Economic Times