IDFC First Bank has raised $500 million through its first international bond issuance, marking the Indian private sector lender's entry into global debt markets.

The three-year bonds carry a coupon of 5.625% and mature in 2029. The offering was backed by an investment-grade rating from S&P Global Ratings and attracted major global investors, including asset managers such as BlackRock, Capital Group and AllianceBernstein, Economic Times Markets reported. An investment-grade rating matters in this setting because many large institutional funds are permitted to hold only investment-grade paper, which broadens the pool of buyers an issuer can reach.

The issuance was carried out through the bank's branch at GIFT City, India's international financial services centre in Gujarat, which serves as the domestic gateway for offshore fundraising by Indian financial institutions. Located in Gandhinagar and set up as India's first such centre, GIFT City operates under a special regulatory and tax regime — its units are treated as outside India for many purposes — and a range of Indian banks and financial firms have used it for foreign-currency fundraising in recent years.

The transaction diversifies IDFC First Bank's funding sources beyond domestic deposits and is intended to support the bank's long-term expansion plans, the report said. A completed debut also gives the bank a pricing reference point in international credit markets, the role maiden issues typically play for first-time borrowers.

IDFC First Bank, headquartered in Mumbai, was formed in December 2018 through the merger of IDFC Bank — created when infrastructure finance company IDFC began banking operations in 2015 — and Capital First, a non-banking finance company focused on consumer and small-business lending. V. Vaidyanathan, who led Capital First, has headed the merged bank since its creation. Its shares are listed on the National Stock Exchange of India and the BSE.

Source: Economic Times Markets