Hdfc: HDFC raises Rs 25k cr in its biggest Rs issue

MUMBAI: HDFC, the country’s largest housing finance company, has concluded its biggest-ever rupee-bond issuance raising Rs 25,000 crore through 10-year non-convertible debentures carrying a coupon rate of 7. 97%. The bond yield translates into a spread of 49 basis points (100bps = 1 percentage point) over Wednesday’s close of the 10-year government security yield. HDFC is continuing to grow its housing portfolio aggressively even as it prepares for a merger with its banking arm. It disburses nearly Rs 3 lakh crore of fresh loans every year. Nearly a third of this is funded through deposits and 25-30% comes from repayment of earlier loans. It needs to raise the balance of nearly Rs 1. 5 lakh crore through market borrowings.

Earlier on Tuesday, HDFC launched the issue to raise Rs 5,000 crore with an option to retain subscription for an additional Rs 20,000 crore. On Thursday, insurance companies, pension funds, provident funds, banks and mutual funds put in 92 bids amounting to Rs 27,863 crore, of which thecompany retained 55 investor bids totalling Rs 25,000 crore. Investment bankers said that the rush for longterm bonds despite tightening of liquidity in the money markets showed that there was a lot of appetite for triple A-rated paper providing decent yields. “Demand in the housing sector continues to be strong across all categories — affordable to premium housing. The penetration level of housing in India is one of the lowest in the world. India’s mortgage-to-GDP ratio is about 11% compared to over 20% in many other emerging markets and more than 60% in some of the advanced economies. On a sustainable long-term basis, the demand is expected to remain strong,” said HDFC executive director V S Rangan.