Banks - India: India AT1: high call likelihood on the first call date vs. coupon reset date

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Banks - India: India AT1: high call likelihood on the first call date vs. coupon reset date

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Banks - India

India AT1: high call likelihood on the first

call date vs. coupon reset date

Credit Analysis

Three months to first call date, reiterate OW HDFCB AT1 26 May 2026

We understand that India USD AT1 is one of the very few EM Asia AT1 bonds which Global Emerging Markets | Corporate

have a different first call date vs. the coupon reset date. For example, HDFCB 3.7 Perp Credit

(OW) with call date on Aug. 25, 2026, has a coupon reset date of Feb. 27, 2027, six Asia | India

Banksmonths post the call date. We have received questions from investors on the non-call

risk upon the first call date as it is close to the call date. We still see high call likelihood Lefu Li, CFA

of HDFCB AT1, which currently still trades below par with YTC at 5.7% and G-spread at Research Analyst

Merrill Lynch (Hong Kong)

206bp. It has more attractive valuations than AXSBIN 4.1 Perp (call date on Sept. 8, +852 3508 2142

2026, UW). AXSBIN has weaker fundamentals than HDFCB at end’FY26 (please see our lefu.li@bofa.com

report: India IG financials - FY26: overall better, but downgrade AXSBIN AT1 to UW) Rachna Jain, CFA

Research Analyst

though we see high likelihood of timely redemption of the AXSBIN AT1 as well. Merrill Lynch (Singapore)

+65 6678 2972

HFDCB AT1: high likelihood of redemption on first call date rachna.jain2@bofa.com

The coupon reset date for HDFCB AT1 is Feb. 27, 2027, to the level at c.7% (H15T5Y

+2.925%). For the outstanding of USD 1bn, assuming HDFCB does not call the bond on

the first call date of Aug. 25, 2026, but makes the redemption on Feb. 27, 2027 when

the coupon resets from 3.7% to c.7.0%, we estimate the interest saving would be about