LIC Housing Fin, HDB Finance reduce fundraise sizes on hardening yields

LIC Housing raises 1,150 cr against Rs 3,000 cr planned

After State Bank of India (SBI) slashed fundraise through tier I bonds on hardening yields, LIC Housing Finance raised Rs 1,150 crore against an indicated up to Rs 3,000 crore via 10-year bonds. The base issue was Rs 1,000 crore and greenshoe option of Rs 2,000 crore. The mortgage lender fixed a coupon of 7.95 per cent.

HDB Financial Services, a unit of HDFC Bank, placed paper (having about 38-month tenor) at a coupon of 8.07 per cent to raise only Rs 244 crore against the indicated amount up to Rs 1,240 crore.

According to bond market dealers, issuers are finding it tough to raise the targeted amount as investors are holding back commitments in the hope of getting higher rates. Two aspects are shaping the market trend — rates are rising and the spread over benchmark government paper is going up, said Ajay Manglunia, managing director at JM Financial.

On February 20, SBI issued additional tier I bonds (AT1) for Rs 4,544 crore against Rs 10,000 crore planned at a base issue size of Rs 2,000 crore. The coupon for the issue was 8.20 per cent.

National Bank for Agriculture and Rural Development (Nabard) also felt the effect of hardening yields. While it raised Rs 5,000 crore via 10-year paper at a coupon of 7.58 per cent early this month, it agreed for a coupon of 7.83 per cent this week to issue 10-year paper to mobilise Rs 5,000 crore.

DME Development (DME), a special purpose vehicle (SPV) to construct Delhi-Mumbai Expressway, issued 10-year bonds at 7.82 per cent to raise just over Rs 3,600 crore against the indicated issue size of Rs 5,000 crore amid hardening bond yields.