Clifford Chance

Clifford Chance advises on India's largest ever offshore US dollar regulatory capital securities issuance

Leading international law firm Clifford Chance has advised a syndicate of 12 lead managers on HDFC Bank’s inaugural offshore additional tier 1 (AT1) capital securities offering of US$1 billion. The offering is the largest-ever offshore AT1 issuance from India, the first AT1 issuance from an Indian bank sold into the United States under the Rule 144A resale exemption and reopens the international US dollar AT1 market for the Indian banking sector.

HDFC will use the proceeds from the issuance to enhance its capital structure and support its growth and expansion plans. Barclays, BoFA Securities, Citigroup, HSBC, J.P. Morgan, Standard Chartered Bank and Merrill Lynch were joint global coordinators, joint bookrunners and joint lead managers, and BNP Paribas, Emirates NBD Capital, Morgan Stanley, MUFG, Société Générale  Corporate & Investment Banking and UBS were joint bookrunners and joint lead managers.

The offering garnered a final order book of US$3.2 billion from 158 accounts, with 64% of the bonds sold in Asia-Pacific and 18% each in EMEA and in the US. By type of investors, asset and fund managers accounted for 66%; sovereign wealth funds, insurance companies and pension funds 23%; and banks, private banks and other investors 11%. The AT1 capital securities included a novel temporary write-down feature at the point of non-viability, which is a feature unique to Indian bank issuers in the international markets.

The cross-jurisdictional Clifford Chance team comprised lawyers in Singapore, New York and Washington D.C., including debt capital markets, bank capital, U.S. federal tax and securities law and compliance specialists. The team was led by partner Gareth Deiner who was assisted by partner Johannes Juette, senior associates Clarisse Fong and Stephanie Juwita Liman, and associate Daniel Dedo.

Gareth said, "We are very pleased to have advised HDFC Bank's joint lead managers in bringing this headline transaction to market. The temporary write-down feature on Indian AT1 instruments is a novel investor-friendly feature compared with the permanent write-downs we typically otherwise see from bank issuers in the wider region. Given their profile, HDFC Bank has paved the way for other Indian banks to access the offshore funding market, and coupled with recent events in the Indian domestic market for bank capital issues, we anticipate there will be similar offerings to follow from India."

Clifford Chance has a leading track record advising on significant corporate and capital markets transactions in India including India's first REIT, Kotak Mahindra's US$993 million qualified institutional placement, and Adani's US$3.5 billion acquisition of SB Energy's renewable energy portfolio