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Indiabulls Housing set to raise Rs 2,500 cr via bond sales

Indiabulls Housing Finance is set to raise Rs 2,500 crore via bond sales after some insurance compan..

By admin , in Markets , at November 4, 2018

Indiabulls Housing Finance is set to raise Rs 2,500 crore via bond sales after some insurance companies, mutual funds and state-run banks showed interest in the triple-A rated paper.

The bonds would open for subscription in the next seven days with one-three and 10-year maturities. Yields, which will be finalised in the electronic bidding platform of stock exchanges, may be in the range of 9.20-9.40%, three market sources familiar with the matter told ET.

The proposed bond sale would be in two tranches.

“While a top insurer would subscribe the 10-year series, two large mutual funds and one of the big public sector banks may collectively subscribe the other series of shorter maturity papers,” said one of the sources cited above.

An email sent to Indiabulls Housing Finance remained unanswered till press time.

The bonds with a 10-year maturity comes at a price for the issuers with yield gap on such bonds likely rising 40-50 basis points over the previous sale, dealers said. While the yield differential with the benchmark bonds was at about 100-110 basis points, it is likely to be about 150 now.

“In the wake of current circumstances, housing finance companies are mostly seen struggling raising money from bond market amid the ongoing confidence crisis," said Ajay Manglunia, executive vice president at Edelweiss Financial Services. "If a HFC in private sector raise bonds, especially long dated, at 9.20-9.40% range, it is a decent level in the prevailing investor sentiment and gives us a sense for the return of normalcy in the markets.”

Over the past one month, Indiabulls Housing Finance has raised Rs 8,500 crore through a cocktail of bank loans, bonds and commercial papers and asset securitisations (loan portfolio sales), said an industry source with direct knowledge of the matter.

During the period the group is said to have bought back around Rs 3,700 crore worth of commercial papers and bonds.

“We have moved on to asset-liability management (ALM) principles as prescribed under Basel III by the Reserve Bank of India (RBI) for banks,” Gagan Banga, vice chairman at Indiabulls Housing Finance, had told a TV channel last month. “We are extremely well covered with all the liquidity that we are holding.”

The company aims to maintain cash and cash equivalents of more than six months of its debt repayments and is now looking to trim down issuance of short-term commercial paper, said a source, who has interacted with the company management.

Dewan Housing Finance, Edelweiss and JM Financial groups too have bought back debt papers worth of about Rs 3,900 crore collectively in past two weeks, ET reported earlier.

Original Article


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