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Federal Bank to raise $500 million via GIFT City dollar bonds
Federal Bank has become the latest Indian lender to tap the dollar debt market through its branch in GIFT City, aiming to raise $500 million through a five-year bond sale, two merchant…
Federal Bank has become the latest Indian lender to tap the dollar debt market through its branch in GIFT City, aiming to raise $500 million through a five-year bond sale, two merchant bankers said on Monday.
The bank's board approved the issuance of foreign-currency-denominated bonds through its International Financial Services Centre Banking Unit in GIFT City on Friday. Bankers said the bank is keeping both private and public issue routes open due to time constraints.
Indian lenders have raised a total of $9.3 billion through dollar bond sales since June 5, when the RBI announced a concessional swap facility for overseas foreign-exchange borrowings. State-run Union Bank of India is also in the market to raise at least $500 million each through three-year and five-year bonds.
Indian Opinion Analysis
The rush to dollar bonds follows the RBI's early closure of a discounted forex swap facility for non-resident deposits, forcing banks to raise overseas funds directly. Federal Bank joins a wave of lenders using GIFT City's IFSC to issue foreign-currency debt at competitive rates. With $9.3 billion raised since June, the total could cross Rs 80,000 crore if Union Bank's dual-tranche issue and others pending are included. The key number to watch is whether Federal Bank prices its bonds below Union Bank's guidance of 120-130 basis points over US Treasuries, which would signal market confidence.
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Source: thehindubusinessline.com
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