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India's HDFC Bank on Thursday completed the largest-ever bond issuance by any bank amid strong demand from long-term investors, but the large fundraise is unlikely to impact yields for upcoming issues from banks as there is enough demand, said analysts.

The private lender raised 150 billion rupees ($1.85 billion) through 10-year Tier-II bonds at an annual coupon of 7.86%, for which it had received bids worth 240.80 billion rupees, according to merchant bankers.

"The issue saw very strong bids from large investors and, in fact, the bond has been trading at a premium in the secondary market as traders did not get much stock from the primary (issue)," said Ajay Manglunia, managing director and head of investment grade group at JM Financial.

The cutoff yield was at a spread of around 60 basis points against 10-year benchmark government securities, which were yielding 7.25% on a semi-annual basis earlier in the day, largely in line with historical trends, as per bankers.

A large state-run insurance company and a big provident fund house invested an aggregate of 90 billion rupees in this issue, merchant bankers said.

"The continuous flow of long-term issuances this week coincides with the large investment appetite of such investors, which helped HDFC Bank garner large amounts at attractive prices," said Venkatakrishnan Srinivasan, founder and managing partner of debt advisory firm Rockfort Fincap.

HDFC Bank completes its debt sale a day ahead of State Bank of India's bond issue.

The nation's largest lender aims to raise up to 100 billion rupees through the sale of 10-year infrastructure bonds, riding on the demand from provident fund houses and insurance companies.

Banks have been sparing in tapping the bond market, leading to higher demand for their debt issues, said Nagesh Chauhan, head of debt capital market at Tipsons Group.

"Since state debt supply has been very low, large investors are scrambling to invest money, and hence such big issuances are easily getting absorbed," a trader with a private bank said.

Further, lower supply from states is also whetting investor appetite for corporate bonds.

Indian states mopped up 4.03 trillion rupees via debt sales in the first eight months of this financial year, lower than the 5.75 trillion rupees scheduled to be raised.

HDFC Bank is set to be merged with parent Housing Development Finance Corp in the coming months, and both entities have been on a fundraising spree this financial year.

While HDFC Bank has raised 30 billion rupees, excluding the latest issue, HDFC has raised around 550 billion rupees through bond issuance. ($1 = 81.1340 Indian rupees)