Domestic Bonds

HDFC raises Rs 10,000 crore through 7.18% debentures

The Housing Development Finance Corporation (HDFC) raised Rs 10,000 crore through 10-year bonds carrying a coupon of 7.18%. The money will be deployed for business operations. The issue size was Rs 500 crore with a green shoe option of Rs 9,500 crore.

Given the company’s high reputation, the price was correct at 7.18%, the bond brokers said, adding that the initial indication was 7.25-7.30% on yield.

HDFC regularly visits the market with debentures and has raised around Rs 50,000 crore in the domestic bond market this financial year, market sources said.

Meanwhile, another housing finance company – Canfin Homes – plans to enter the market to raise up to Rs 700 crore through 39-month bonds.

In January 2022, CRISIL reaffirmed the “AAA” rating of HDFC’s non-convertible debentures (NCD).

The ratings continue to reflect HDFC’s market leading position, strong track record, good asset quality, diversified and stable resource profile.

It also has a strong financial risk profile. These strengths are partially offset by exposure to fierce competition in the housing finance segment.

HDFC has a well-diversified and stable resource profile, which allows for flexibility in borrowing.

The borrowing mix mainly includes market borrowings (41% of total borrowings as of September 30, 2021) and term deposits (35%). Term loans (including external commercial or ECB borrowings) represented 24% of total borrowings as of September 30, 2021.

Strong resource mobilization capabilities, high fixed deposit rollovers and a substantial proportion of floating rate mortgages in the portfolio mitigate the inherent tenure mismatch and interest rate risk in the finance industry housing.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor