Mumbai, July 16: Housing Development Finance Corporation (HDFC) has entered the private placement market to raise Rs 100 crore. This is the first time that the country's premier housing finance company is raising resources through the private placement route. It is offering 14 per cent (annualised) for a five-year debenture.DSP Merrill Lynch has been appointed the sole arrangers to the issue. HDFC plans to retain any amount of oversubscription it receives. The issue, opened on July 14, will remain open for a month. "This is a very rare paper.
It will be grabbed by the investors as it is priced very finely," a banker said.
According to sources, the money is being raised to augment its long-term resources and meet the objective of enhancing residential housing stock in the country. The debt issue has been rated triple-A (AAA) by rating agencies Crisil and LAAA by Icra.
Merchant banking sources said that the maiden HDFC issue is being targeted at provident funds, superannuation funds and gratuity funds.Sources said that this is the first instance of a private sector issue specifically targeting these funds. These funds are allowed to invest up to 10 per cent of their incremental accretion in private sector bonds which have an investment grade from at least two credit-rating agencies.
The issue has no call and put option, and the interest is payable annually. The face value of the debenture is Rs 1,00,000 and the minimum application is for one debenture and in multiples thereof. The debentures are proposed to be listed on the wholesale debt market (WDM) of the National Stock Exchange.
Earlier in the week, HDFC chairman Deepak Parekh had said that a DM 30 million KfW line of credit to the housing finance company was under a cloud in the post-sanctions scenario.
Merchant banking sources said the HDFC issue has been priced competitively. IDBI is offering 13.75 per cent for a five-year paper (annualised) and on-tap issue of both ICICI and IDBI are offering higher coupons, a merchant banking sourcesaid.
Promoted in 1977, HDFC has a networth of Rs 1,777 crore and deposits over Rs 4,400 crore. The cumulative deposits of the institution till March 31, 1998, were over Rs 12,000 crore and the non-performing assets were pegged to the tune of 0.69 per cent. The capital adequacy ratio of HDFC stood at 17.6 per cent - the highest in the banking industry.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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