MUMBAI, June 19 -- State-owned Bank of Baroda is preparing to raise about $500 million through a dollar-denominated bond sale as early as next week, three people familiar with the matter said. This would make it the second Indian lender to tap overseas markets after the Reserve Bank of India's recent incentives to boost foreign-currency borrowing. "They (Bank of Baroda) have received board approval of up to $1 billion. So, since large transactions always happen at $500 million and above, they will hit the market with $500 million mostly," a merchant banker said on the condition of anonymity. The proposed bond is likely to carry a five-year maturity and price at about 90 basis points over comparable US Treasury yields, market participants said. That would imply a coupon of roughly 5.07%. The planned fundraising follows a successful $750 million dollar-bond sale by HDFC Bank earlier this week at a spread of 90 basis points over benchmark US Treasury yields. The benchmark 10-year US Treasury yield closed at 4.49% on Wednesday. On Wednesday, CareEdge Global assigned a BBB+ rating to Bank of Baroda's long-term foreign-currency debt and gave the same rating to the bank's $4 billion global medium-term notes programme, according to exchange filings. An email sent to Bank of Baroda seeking confirmation did not elicit a response till press time. The issue comes as state-owned lenders and financial institutions revive overseas borrowing plans after the RBI unveiled a concessional foreign-exchange swap facility for external commercial borrowings (ECBs) raised by public-sector undertakings and Indian banks. Last week, Mint reported that at least five state-owned financial institutions-Power Finance Corp., Rural Electrification Corp., Housing and Urban Development Corp., National Bank for Financing Infrastructure and Development, and Indian Railway Finance Corp.-were planning to raise more than $5 billion through external commercial borrowings. Under the RBI scheme announced on June 5, the central bank will provide a concessional forex swap facility for ECBs raised by PSUs and Indian banks through 31 December, for tenors of up to five years. The facility effectively absorbs the full cost of hedging dollar exposure, allowing borrowers to access overseas funds at lower all-in costs. The facility will also apply to the undrawn portion of existing ECBs but excludes borrowings with embedded options and refinancing transactions. For overseas foreign-currency borrowings raised by authorized dealer category-I banks with maturities of three to five years, the RBI will undertake swaps at a fixed rate of 1.5% annually, compounded semi-annually. That compares with current dollar-rupee forward rates of slightly above 3% annually, according to SBI's Ecowrap report dated June 9. The RBI's move comes after a sharp slowdown in overseas fundraising. In FY26, inflows through ECBs and foreign-currency convertible bonds fell 30% to $42.9 billion from $61.2 billion in FY25, as per data cited in the report. The decline was driven by relatively attractive domestic borrowing costs following monetary-policy easing, expectations around the US Federal Reserve's rate trajectory and elevated hedging costs, which made offshore borrowing less economical....