HDFC Seeks to Raise .` 1k cr via Bonds

The Economic Times - - Markets + Finance - SAIKAT DAS

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%.

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