HDFC raises Rs 25,000 crore in India’s largest-ever rupee bond issue
Mortgage lender Housing Development Financial Corporation (HDFC) has raised Rs 25,000 crore in the country’s largest-ever rupee bond issue. The housing finance company issued 10-year non-convertible debentures (NCDs) carrying a coupon of 7.97% p.a. on February 16, as per the statement. This was over the benchmark bond yield of 7.34% on Thursday.
The initial issue was worth Rs 5,000 crore with an additional Rs 20,000 crore retained in the case of oversubscription. The issue was oversubscribed and was well received by investors, insurance companies, pension funds etc. The issue received 92 bids worth Rs 27,863 crore. However, HDFC retained 55 investor bids worth Rs 25,000 crore.
The company said that the NCDs would be allotted on February 17, 2023. The proceeds from the issue are to be utilised for financing or refinancing the corporation’s housing finance business requirements.
The housing financier HDFC believes the demand for housing in India is expected to remain strong on a sustainable long-term basis and investor support in long-term financing, aids the allocation of resources towards on-lending to the sector.
HDFC has so far in this financial year raised a total of Rs 78,414 crore through bond issuance. This is the highest by any company. The fundraising comes ahead of the upcoming merger with banking giant HDFC Bank. This is done as the company will require significant capital once the merger is completed. The company would also require long-term funds for the newly merged entity.
In December 2022, HDFC Bank raised an amount of Rs 15,000 crore through tier-2 bonds which have been the largest sale by a bank in the current financial year.
In April 2022, HDFC Bank announced that it would be taking over and merging with its sister company, HDFC. The total value of this merger is around $40 billion. The merger is expected to be completed by the second or third quarter of the next financial year though officials from the bank have said that the process of merging the entities could be completed before schedule.
The merger would allow HDFC to tap into low-cost savings and current account deposits of HDFC Bank and aid the company to expand its assets. While the HDFC bank would gain from the large portfolio of housing loans of HDFC.
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