Informist, Tuesday, May 24, 2022
By Subhana Shaikh and Sanjana Raina
MUMBAI/NEW DELHI – Financial sector heavyweight Housing Development Finance Corp Ltd today tapped the debt market for the first time since the announcement of its proposed merger with HDFC Bank, conducting the biggest corporate bond sale in the current financial year so far.
It raised 77.42 bln rupees through its 10-year paper at a pre-set coupon of 7.86%, 51 basis points higher than the yield on the 10-year benchmark government bond.
The issue had a base size of 5 bln rupees and a greenshoe option of 115 bln rupees.
Proceeds from the issue will be used to augment long-term resources and to finance or refinance the housing finance business requirements of the company.
According to merchant bankers, the major investor in today’s issue was a large state-owned insurance company which placed bids worth 50 bln rupees. Other long-term investors such as pension funds were also said to have bought HDFC’s ‘AAA’ rated bond.
However, many investors refrained from placing bids due to expectation of a likely repo rate hike in the Reserve Bank of India’s policy meeting in June, bankers said.
HDFC’s bond offering has come at a time when the primary supply of corporate bonds has significantly dwindled since the beginning of the current financial year owing to a surge in the cost of borrowing.
RBI’s Monetary Policy Committee had increased the repo rate by 40 basis points to 4.40% and the cash reserve ratio by 50 basis points in an off-cycle meeting earlier this month.
The last time the housing financier borrowed from the market was in March, when it raised 100 bln rupees through a 10-year paper.
With HDFC’s latest bond sale sailing through in the current market environment, dealers believe other issuers are likely to make a beeline to tap the market from next month onwards.
Today, shares of HDFC closed 1.4% higher at 2,206.80 rupees, while those of HDFC Bank closed up 1.2% at 1,318.95 rupees on the National Stock Exchange.
End
Edited by Vidhi Verma
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