HDFC raises Rs 10,000 crore through debentures at 7.18%

Housing Development Fina­nce Corporation (HDFC) has raised Rs 10,000 crore through 10-year bonds carrying a coupon of 7.18 per cent. 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 high standing of the company, the pricing was fine at 7.18 per cent, said bond dealers, adding that initial indication was 7.25-7.30 per cent on the yield.
 

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

Meanwhile, another housing finance company — Canfin Homes — plans to hit the market to raise up to Rs 700 crore through bonds having 39-month tenure.
 

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

The ratings continue to factor in the leading market position of HDFC, sound track record, healthy asset quality, diversified and stable resource profile.
 

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

HDFC has a well diversified and stable resource profile, leading to flexibility in borrowings.
 

The borrowing mix primarily comprises market borrowings (41 per cent of total borrowings as on September 30, 2021) and fixed deposits (35 per cent). Term loans (including external commercial borrowings  or ECBs) accounted for 24 per cent of total borrowings as on September 30, 2021.
 

Strong resource-raising capabilities, high fixed deposit renewals, and a substantial proportion of floating rate home loans in the portfolio mitigate the inherent tenure mismatch and interest rate risk in the housing finance business.