India’s Most Valuable Bank Mulls Its First Riskier Offshore Bond

Pedestrians walk past a security guard outside an HDFC Bank Ltd. branch in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

India’s Most Valuable Bank Mulls Its First Riskier Offshore Bond

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HDFC Bank Ltd., India’s biggest lender by market capitalization, is considering to sell its first-ever offshore bonds that qualify as capital as it boosts buffers.

The Mumbai-based lender’s board on Saturday will mull a plan to issue perpetual Additional Tier 1 notes that comply with Basel III capital norms, according to a filing late Tuesday. It would be only the second such offshore offering from an Indian bank after the nation’s largest lender State Bank of India sold such securities in 2016.

The debt is riskier because it can be written down in a crisis. That’s a concern because India’s banking sector is saddled with one of the world’s worst debt piles. Financial institutions need to beef up capital ratios in anticipation of more soured loans as the latest wave of the pandemic batters businesses and leaves millions jobless.

Read more about how Indian banks are hoarding record cash here

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