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HDFC Bank arm HDB Financial to raise $300 million in overseas loan

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Mumbai: HDB Financial Services, a subsidiary of HDFC Bank, is raising $300 million in its first-ever overseas syndicated loan as it aims to diversify its borrowing resources, two people with direct knowledge of the matter told ET. “It has already launched the syndication programme, which will be closed soon,” said one of the persons cited above.

The loan would have a three-year maturity.

It could be priced after adding about 133 basis points over the London Interbank Offered Rate (LIBOR), an international gauge. HSBC, State Bank of India, and Bank of Baroda are helping the company raise the loan. HDFC Bank, SBI, and Bank of Baroda did not respond to ET’s queries.

HSBC declined to comment. The loan cost on a fully hedged basis may be on a par or marginally tighter than local borrowings, said dealers involved in the exercise. The bank planned to sell the shares in HDB Financial Services before March 31 in a deal that may raise about Rs 10,000 crore ($1.4 billion), Bloomberg reported a few months ago. NBFCs have been struggling to raise money locally after the IL-FS defaults.

This prompted them to tap overseas credit markets, with the likes of Shriram Transport making foreign issuances. “HDB Financial has emerged as one of the larger players in the retail financing space, over the past few years,” rating company CRISIL had said in a note on August 21.

Its long term rating is triple-A with stable outlook. The overall loan portfolio has grown 22 per cent to Rs 56,287 crore as on June 30, 2019, from Rs 45,889 crore a year ago.

The loan book has also diversified, with increased presence in commercial vehicle/construction equipment (CV/CE) financing and business loans. “HDB Financial is now expanding into consumer durable financing, digital products loans and other related segments,” CRISIL said. HDB Financial reported a profit after tax of Rs 1,153 crore on a total income of Rs 8,724 crore for fiscal 2019 as against Rs 933 crore and Rs 7,027 crore, respectively, in fiscal 2018, show CRISIL data. The company has also widened its reach.

With a diversified product offering and a pan-India presence, CRISIL expects growth for HDB Financial to be above the industry average over the medium term. HDB’s gross bad loans rose 2.3 per cent as on June 30, compared with 1.78 per cent three months ago.

Slippages in the asset financing book led to the increase in gross non-performing assets.




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