Sbi Caps Places Nhb Mortgaged Papers

The coupon is around 50 basis point higher than that on the government papers of the same maturity traded in the secondary market.

The issue is the first of its kind and is seen as a prelude to the development of the secondary mortgage market in the country.

The investors in the issue include Unit Trust of India, Life Insurance Corporation Mutual Fund, Bank of Baroda, Indian Overseas Bank, Punjab National Bank, State Bank of Hyderabad and IDFC Ltd.

NHB had withdrawn this issue in July due to the volatile interest rate scenario following the Reserve Bank of India's (RBI) decision to hike bank rate by 100 basis points.

 

NHB had informed investors that the issue had been deferred and the re-pricing was being done.

SBI Cap has said that "the issue is placed successfully despite the volatility in the debt market with call rates ruling at around 14 per cent and repo rates touching 14.5-15 per cent."

Market players perceive this as an encouraging sign for the future of mortgage securitisation in the country. Securitisation puts housing finance companies (HFCs) in direct contact with financial markets.

The securitisation issue, which is backed by retail housing loan pools originated by HDFC and LIC Housing Finance, raised Rs 59.70 crore and Rs 43.84 crore, respectively, for the two housing finance companies (HFCs).

Securitisation gives capital relief to HFCs as it is an off-balance sheet funding technique thereby helping them to maintain their capital adequacy ratio.

The transaction involves the assignment of retail housing loans from HFCs to NHB. The loans, repayable in equated monthly instalments, have been packaged and offered to investors as pass-through certificates (PTCs) by NHB.

The housing loans, which constitute the receivables to be securitised, will be held by a special purpose vehicle in the nature of a trust, declared by NHB.

Before the bank rate hike announced, the spreads of NHB were 2.5 per cent and it fell by 100 basis points after the rate hike. NHB also proposed to securitise loans worth Rs 100 crore belonging to Dewan Housing Finance Ltd and Canfin Homes Ltd.