'Freak trade': Investors push up yields of Indiabulls Housing bonds to 43%

Investors on Thursday pushed up the yields of a few Indiabulls Housing Finance (IHFL) bonds to as much as 43 per cent, which a senior executive of the company termed as ‘freak trades’.

Late on Thursday evening, the company notified exchanges that it offered to buy back all its bonds maturing in November and December at par. “The company will also evaluate further premature redemption of its non-convertible debentures from time to time,” IHFL said in its filing.

This would take care of Rs 1,000-core of bonds outstanding. According to sources, the company may also consider an additional Rs 2,500 crore of bond buybacks in the days to come. 

A five-year maturity, 8.75 per cent coupon bond, issued on September 26, 2016, with an annual interest payment schedule, shot up to 42.81 per cent.

According to the BSE website, the last traded price of the bond was Rs 60.38, for a trade size of Rs 135 crore. There were two other bonds that were traded, albeit for a small value of Rs 10 crore and Rs 65 crore, respectively, in which the yields touched 43.04 per cent and 33.51 per cent, respectively. The coupons of these bonds were at 8.90 per cent (maturing on September 26, 2021) and 8.57 per cent (maturing on March 30, 2022). 

Gagan Banga, managing director and vice-chairman of IHFL, said these were ‘freak trades’ done near the end of the market closure.

“There are some motivated groups of people dragging down our equity prices. We are taking a number of actions against them,” said Banga. 

Assuring that the sharp rise in bond yields on a thinly traded basis is not a reflection of the company’s fundamentals but a feature of a shallow bond market, Banga said the company has over Rs 18,000 crore of cash that would cover its repayment obligations for the next 12 months at least.