Lic Housing Ncd Oversubscribed 113 Per Cent

LIC Housing Finance Ltd's (LICHFL) Rs 150-crore non-convertible debenture (NCD) issue was oversubscribed by 113 per cent as the housing finance company mopped up Rs 320 crore. The housing finance outfit decided to retain Rs 234 crore. The issue closed on October 24.

Kranti Sinha, director and chief executive of LICHFL, said that Rs 234 crore was retained because it met the cut-off yield of 9.5 per cent for 7-year paper and 10.10 per cent for 10-year paper. The balance has been returned to the investors.

LICHFL has identified a Rs 900-crore borrowing programme through the NCD route. The Rs 900-crore paper has been rated 'AAA' by Crisil, certifying maximum safety.

"Since this was the first tranche for us, and we were a little known commodity, the pricing of the issue was slightly higher than what it would have been for 'AAA' corporate paper," he said. He identified it to be higher by five to 10 basis points.

Reduction in the rate of interest on borrowings will help LICHFL retain its margins at 1.8 to 1.9 per cent, said Sinha. LICHFL has been looking at reducing its cost of funds from the prevailing 11.8 to 11.9 per cent. Sinha said: "With the completion of the NCD issue by March 31, 2002, our cost of funds will come down to 11.4 per cent".

LICHFL is also looking at tapping funds through the fixed deposit route, which has already been rated 'AAA'. "We are going slow on taking fixed deposits as we need to create the necessary infrastructure to collect and service retail depositors," said Sinha.