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Informist, Wednesday, Jul. 8, 2026

--NABARD official: Eyeing up to $2 bln via 5-year dollar bond by Jul-end 
--NABARD official: See 5-year bond coupon 100 bps over overnight dollar rate 

--NABARD official: In talks with domestic, foreign bks to issue dollar bonds 
--NABARD official: Awaiting government's approval to issue dollar bonds

 

By Vaishali Tyagi
 

NEW DELHI – National Bank for Agriculture and Rural Development plans to raise up to $2 billion through five-year dollar-denominated bonds by the end of July, an official at the state-run financial institution told Informist. "We have already sent (documents) for approval from GoI (government of India)...as soon as we receive the approval, we will be in the queue for overseas fundraising," the official said on condition of anonymity. 

 

The move by the state-owned company comes in the backdrop of the Reserve Bank of India announcing a concessional dollar-rupee swap facility for external commercial borrowings raised by public sector undertakings. On Jun. 5, RBI Governor Sanjay Malhotra introduced a facility to cover the full hedging costs for banks raising fresh three- to five-year foreign currency non-resident (bank) deposits till Sept. 30. 

 

The official also said that NABARD was in discussions with several foreign and domestic banks for the proposed dollar bond, and that all the documentation was already in place. According to the official, NABARD does not expect to borrow at significantly higher rates amid elevated global yields, as it would defeat the purpose of the RBI's concessional swap facility. "We are targeting that it should be below the domestic rate...otherwise there is no benefit (of overseas borrowing)," the official said.

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was up 14-15 basis points at 7.37-7.40% from 7.23-7.25% Tuesday, while the indicative yield on NABARD's five-year bonds rose 11-20 bps to 7.35-7.45% from 7.24-7.25% Tuesday. 

 

The coupon on the five-year dollar-denominated bonds is expected to be 100 basis points over the secured overnight financing rate, the official said. According to an Informist poll, the RBI's concessional dollar-rupee swap facility and overseas foreign currency borrowings are expected to push overall borrowing to $65 billion in 2026-27 (Apr-Mar).  

 

On fundraising in the domestic market, the NABARD official said the institution had completed a domestic fundraise recently. On Friday, NABARD raised INR 80 billion through bonds maturing on Dec. 14, 2029, at a coupon of 7.16%. NABARD's issue was fully susbcribed, with bids aggregating INR 143.10 billion in the range of 6.90-7.29%. In June, NABARD had raised INR 67.80 billion by reissuing its 7.44% bonds due July 2029. 

 

After a lull in external commercial borrowings, fundraising activity revived in June following the central bank's move. Dealers said several state-owned entities and private companies tapped the dollar bond market following the RBI's concessional swap window. If borrowers get lower rates overseas, they would definitely opt for that, market participants said. 

 

Axis Bank, Power Finance Corp., HDFC Bank, and State Bank of India have already tapped overseas markets for funds. Bank of Baroda, Housing and Urban Development Corp, Small Industries Development Bank of India, and Capri Global are also expected to raise funds from foreign markets, market participants said.  End

 

US$1 = INR 95.56

 

Edited by Avishek Dutta

 

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