HDFC raises Rs 25K cr in rupee bond sale

Mortgage lender HDFC, on Thursday,  raised Rs 25,000 crore selling bonds maturing in 10 years, making it country’s largest privately placed corporate bond issue.
HDFC Logo
HDFC Logo

MUMBAI:  Mortgage lender HDFC, on Thursday,  raised Rs 25,000 crore selling bonds maturing in 10 years, making it country’s largest privately placed corporate bond issue. India’s largest housing financier, which will soon be merged with HDFC Bank, sold 10-year Non-Convertible Debenture (NCDs) carrying a coupon rate of 7.97% per annum.

The issue was oversubscribed and received 92 bids amounting to Rs 27,863 crore of which the company retained 55 investor bids totalling Rs 25,000 crore. On Wednesday, the 10-year benchmark government bond yield closed at 7.35 % in the secondary market.

“The proceeds from this bond issuance will used to meet our lending requirements. The response from institutional investors was very good. Insurance companies including LIC, banks, mutual funds, pension trusts, provident funds were among the major investors,” a senior official of HDFC told TNIE. “We have raised funds from the market previously also so we knew the institutions will have a strong participation,” he said.  The deal was arranged by ICICI Bank, Axis Bank, HDFC Bank, and ICICI Securities Primary Dealership, he added. HDFC in a statement said that as soon as the bids opened on Thursday, there was a wide participation from several high-quality investors.

The issue was launched on Tuesday on electronic book platform to raise Rs 5,000 crore with an option to retain subscription for an additional Rs 20,000 crore. The benchmark transaction is indicative of the extent of investor interest and confidence in the Group.

“Demand in the housing sector continues to be strong throughout the country and 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% as against 20%+ in many other emerging markets and 60%+ in some of the advanced economies,” said V S Rangan, executive director, HDFC. “On a sustainable long-term basis, demand for housing is expected to remain strong, and investor support in long term financing aids allocation of resources towards on-lending to the sector,” he added. 

HDFC is awaiting regulatory approvals for its reverse merger with its banking subsidiary in a $50 billion deal announced last year. The companies expect to close the transaction in the second quarter of the year. In December last year, HDFC Bank had raised 15,000 crore from the market, which was the largest-ever bond issuance by any bank.

Issue  oversubscribed, receives bids of Rs 27,863 crore 
The issue was oversubscribed and received 92 bids amounting to Rs 27,863 crore of which the company retained 55 investor bids totalling Rs 25,000 crore. On Wednesday, the 10-year benchmark government bond yield closed at 7.35 % in the secondary market

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