State Bank of India and Bank of Baroda are set to become the first users of the Reserve Bank of India's subsidised hedging window for overseas borrowings, with plans to raise about $1 billion through five-year dollar bonds, three sources said on Friday.The state-run lenders are each targeting around $500 million, the sources said.Neither bank responded to Reuters requests for comment.
The sources requested anonymity as they are not authorised to speak to media.
Both the banks will aim to complete the issue before the end of this month, as they had been waiting for the central bank's facility to be formalised, one of the sources said.The Reserve Bank of India said this week that external commercial borrowings with an average maturity of at least three years by state-run companies would qualify for a swap facility at a fixed rate of 1.5% per annum, compounded semi-annually.The facility lowers hedging costs, making overseas borrowing cheaper for companies and banks.
