Indiabulls Housing Finance is planning to raise up to Rs 7,000 crore through a public issue of non-convertible debentures (NCDs). The issue is slated to open on September 15 and close on September 23, the company said on Monday.
The instruments will be available for qualified institutional buyers, corporate investors, high net worth individuals and retail investors, and will have coupons ranging from 8.55% to 9.15% for tenures of three, five and 10 years.
The issue is the fourth of its kind this financial year, with Dewan Housing Finance, Mahindra & Mahindra Financial Services and SREI Infrastructure Finance having already raised Rs 14,000 crore, Rs 1,000 crore and Rs 1,000 crore, respectively, through public issues of NCDs and bonds.
“It has been very encouraging to see the financial system recognising the vital role performed by HFCs in fulfilling the affordable housing agenda of the government. The recent revision in limits for investment by Sebi for investment in HFCs and the new Irdai investment guidelines will also open up fresh limits for investments into HFCs by insurance companies and mutual funds,” Gagan Banga, vice-chairman and managing director at Indiabulls Housing, said.
One of the main reasons behind companies’ willingness to raise more funds through public issue of debt instruments is the difference between bank lending rates and prevalent money market yields.
“It is a win-win for both parties. If any of these companies go to a bank for a loan, the bank would offer them nothing at less than 10%. For depositors, the bank would not offer anything more than 7%. So higher-rated NCD issues are looking more and more
lucrative for retail investors,” Ajay Manglunia, executive vice-president and head – fixed income at Edelweiss Financial Services, told FE.
He added that given the volatility in other markets such as commodities and real estate, retail investors are looking to invest in debt securities.