HDFC Seeks to Raise .` 1k cr via Bonds
The Housing Development Finance Corporation (HDFC), India’s largest mortgage lender, on Wednesday launched its first private bond issue in 2014-15 to raise up to .` 1,000 crore, offering about 9.13% for a 366-day maturity. The issue came after a 2-month lull as firms were seeking exemption on certain redemption reserve requirements under the amended Companies Act. On the first day, the company raised about .` 850 crore, according to merchant bankers familiar with the development. The issue generated considerable interest among institutional investors, including foreign institutional investors, mutual funds, insurers and corporate houses. A for- eign institutional investment arm of a large European bank may have bought more than .` 500 crore of this AAA-rated debt instrument, two domestic institutional investors told ET on condition of anonymity. However, an email sent to HDFC remained unanswered at the time of going to press. “After a long time, a toprated issuer brought out an issue following exemption from the government. Issues are likely to rise in June,” said a person with direct knowledge of the matter, adding that yield is attractive as the 1-year bank certificate of deposit is quoting about 9%. Bond yields move inversely to prices.
The yield spread or a gauge for pricing, which is currently 13 basis points, was about 20-25 bps last time when the housing finance company had raised funds prior to April. This suggests a better pricing for the company this time.
In the secondary market, HDFC bonds maturing in 2016 are currently quoting yields in the range of around 9.25-9.35%, 20-30 bps lower than one-month earlier levels. ICICI Securities Primary Dealership and Deutsche Bank are the two investment bankers for the issue. Last week, ET had reported that the ministry of corporate affairs had issued a notice granting exemption to all non-banking finance companies from maintaining 50% debenture redemption ratio (DRR), which was mandated for public issuers earlier, but at 25%.