Bank of Baroda is considering raising funds through a dollar-denominated bond issue, encouraged by strong investor demand for State Bank of India’s recent foreign-currency debt sale, according to banking sources. India’s second-largest state-run lender by assets is planning a dual-tranche bond issue with maturities of three and five years and has provided initial pricing guidance. The bank is offering a spread of 120 basis points over US Treasuries for the three-year tranche and 130 basis points for the five-year tranche. Bankers said Bank of Baroda could target around $500 million through each maturity, although the final allocation could change depending on pricing and investor demand. The proposed bonds will be issued through the bank’s International Financial Services Centre Banking Unit at GIFT City, with proceeds intended to meet funding requirements at its head office and overseas branches, as well as for general corporate purposes. The move follows State Bank of India’s successful $500 million five-year dollar bond issue on Wednesday, which carried a 5.25% coupon and was priced at a spread of just 88 basis points over US Treasuries, significantly tighter than its initial guidance of 120 basis points. The issue attracted bids of nearly $2.5 billion, highlighting strong investor appetite. Other major Indian lenders, including HDFC Bank, Axis Bank and ICICI Bank, have also raised funds through dollar bonds in recent months. Indian banks have increasingly turned to overseas markets after a Reserve Bank of India swap facility announced in June made foreign-currency borrowing more attractive. Bank of Baroda’s proposed issue could further underscore the growing appetite among Indian lenders for international funding.